The Bybit hack of February 2024 shattered records as hackers orchestrated the largest cryptocurrency theft in history, making off with $1.4 billion worth of Ethereum. This single attack represented more than 60% of all crypto funds stolen in 2024, triggering unprecedented market turbulence and user panic.

Following the breach, Bybit faced a severe test of resilience as users withdrew over $5.3 billion in a single day. However, the exchange demonstrated remarkable recovery capabilities by fully replacing the stolen Ethereum using its own reserves and help from the crypto ecosystem. The suspected involvement of the Lazarus Group, a notorious North Korean hacking collective, added another layer of complexity to this watershed moment in cryptocurrency security.

This comprehensive timeline examines how the attack unfolded, its immediate aftermath, and the industry-wide response that followed. We'll explore the technical details of the breach, Bybit's crisis management approach, and the broader implications for cryptocurrency security.

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Understanding the Lazarus Group

Operating since 2009, the Lazarus Group stands as North Korea's elite hacking organization, backed by the country's military intelligence. Initially gaining notoriety through the 2014 Sony Pictures attack and the 2016 Bangladesh Bank heist where they stole $81 million, the group has steadily evolved into a formidable force in cryptocurrency theft.

Previous Crypto Attacks

The group's first major cryptocurrency operation targeted Bithumb Exchange in 2017, resulting in a $7 million theft. Subsequently, their attacks grew more sophisticated and lucrative. Throughout 2023, Lazarus orchestrated several high-profile heists, including the $100 million Atomic Wallet breach, $37.3 million from CoinsPaid, and $60 million from Alphapo. By the end of 2024, Chainalysis reported that Lazarus had executed 47 cryptocurrency hacks, amassing $1.34 billion.

North Korean Connection

Unlike typical cybercrime groups, Lazarus operates with explicit government support, facing no risk of prosecution within North Korea. The group, internally known as 414 Liaison Office, serves a dual purpose: disrupting foreign entities while generating funds for the North Korean regime.

The U.S. Department of Justice has identified Lazarus as part of North Korea's strategy to undermine global cybersecurity and generate illicit revenue. Their operations primarily target South Korean interests, although their scope has expanded globally. The group employs sophisticated techniques, including spear-phishing campaigns, destructive malware attacks, and social engineering.

The FBI actively tracks Lazarus activities, confirming their responsibility for multiple high-profile international virtual currency heists. In response, the U.S. Treasury's Office of Foreign Assets Control sanctioned the group in 2019. Nevertheless, Lazarus continues to adapt their tactics, particularly focusing on cryptocurrency platforms due to their potential for high rewards and relative anonymity.

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Inside the $1.5B Bybit Hack

On February 21, 2025, at 12:30 PM UTC, Bybit detected unauthorized activity during a routine transfer from their ETH Multisig Cold Wallet. The sophisticated attack resulted in the theft of over 400,000 ETH and stETH, valued at approximately $1.5 billion.

Initial Breach Detection

Check Point's Blockchain Threat Intelligence system first flagged the anomaly in the Ethereum blockchain network. The attackers exploited a critical vulnerability in the user interface of the Safe.global platform. Rather than targeting protocol flaws directly, they employed advanced social engineering tactics to manipulate the transaction process.

How Hackers Accessed The Funds

The breach occurred through a complex series of steps. First, the attackers identified the multisig signers responsible for approving transactions. They created a deceptive interface (spoofed User Interface) that displayed legitimate transaction details while masking malicious code underneath. Upon receiving approval from the signers, the attackers gained control of the cold wallet through a delegate call to their contract at 0xbdd077f651ebe7f7b3ce16fe5f2b025be2969516.

The hackers then:

• Manipulated the smart contract logic
• Masked the signing interface
• Altered the underlying transaction details
• Transferred funds to unidentified addresses

Immediate Market Impact

The news triggered significant market volatility. Ethereum's price dropped 4.2% from $2,828 to $2,708 before rebounding 3.36% to $2,759 within 10 minutes. Moreover, the hack prompted a surge in withdrawal requests, with over 350,000 users attempting to secure their funds. The total outflow reached a staggering $5.5 billion.

The stolen funds were distributed across 53 wallets, making it challenging for the hackers to liquidate such a large amount without detection. Notably, the 500,000 ETH held by the hacker surpassed even Ethereum co-founder Vitalik Buterin's holdings of 240,000 ETH. To maintain stability, Bybit secured a bridge loan covering 80% of the lost ETH, effectively preventing a larger market downturn.

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Bybit's Crisis Response

Within minutes of detecting the breach, Bybit's leadership team sprang into action with a comprehensive crisis response plan. CEO Ben Zhou immediately called for "all hands on deck" to handle the unprecedented situation.

Emergency Protocols Activated

The exchange swiftly secured emergency funding from undisclosed partners to cover potential losses and maintain operational stability. When Safe—a decentralized custody protocol—temporarily suspended its smart wallet functionalities, Bybit faced an additional challenge with $3 billion in USDT reserves locked in cold wallets.

Managing Mass Withdrawals

The exchange processed over 350,000 withdrawal requests within 12 hours of the incident. Despite facing a "bank run" that led to withdrawals of approximately $5.5 billion, Bybit's team worked through the night to develop new software based on Etherscan for manually verifying signatures.

Their efforts paid off as:

• All withdrawal requests were completed without significant delays
• Client activity returned to pre-hack levels within 24 hours
• Operations stabilized with normal deposit and withdrawal functions

Communication Strategy

Bybit set a new standard for crisis communication in the crypto industry. Their response included:

Ben Zhou addressed the community within 30 minutes via social media. Furthermore, he conducted a two-hour livestream session just one hour after the incident, providing real-time updates and answering community questions. This transparent approach earned praise, with industry observer Casey Taylor noting on X, "Bybit just delivered a masterclass in crisis communications after experiencing the largest hack in crypto history".

The exchange maintained constant communication through structured live sessions, offering concrete numbers and timelines to build confidence. Additionally, they launched a bounty program, offering up to 10% of retrieved assets as rewards.

Most significantly, Bybit confirmed their financial stability by announcing full 1:1 backing of client assets. The exchange successfully restored its Ethereum reserves, demonstrating remarkable resilience in the face of one of crypto's most significant security challenges.

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Ethereum Community Reaction

As the magnitude of Bybit's $1.5 billion hack unfolded, a fierce debate erupted within the Ethereum community regarding potential solutions. BitMEX co-founder Arthur Hayes ignited discussions by reaching out directly to Ethereum co-founder Vitalik Buterin, proposing a controversial solution to recover the stolen funds.

Rollback proposal debate

The suggestion to roll back the Ethereum blockchain sparked immediate controversy. Bybit CEO Ben Zhou acknowledged engaging with Vitalik Buterin and the Ethereum Foundation to explore options. Supporters of the rollback, including JAN3 CEO Samson Mow, argued that preventing North Korean hackers from accessing stolen assets justified such an intervention.

Opponents, primarily blockchain purists, stood firmly against any tampering with the network. Pseudonymous crypto trader Borovik emphasized that "a rollback can only happen if you split the chain. Ethereum's reliability and neutrality would be at risk".

Technical challenges

Ethereum core developer Tim Beiko quickly dismissed rollback proposals as "technically intractable". He outlined several critical obstacles:

• Unlike the 2016 DAO hack, the Bybit transactions followed standard protocol rules
• Ethereum's current ecosystem complexity, especially with DeFi and cross-chain bridges, would cause widespread disruption
• A complete rollback would invalidate legitimate transactions without reversing off-chain activities

Blockchain expert Laura Shin provided additional context, explaining that Ethereum's architecture fundamentally differs from Bitcoin's. Instead of a continuous transaction chain, Ethereum uses smart contracts and direct balance updates, making traditional rollbacks impractical.

Yuga Labs' blockchain vice president emphasized that the impact would extend far beyond the stolen $1.5 billion, potentially affecting "thousands of innocent people" through unintended consequences across decentralized finance platforms. Ultimately, the technical complexities combined with potential ecosystem-wide disruption effectively ended serious consideration of a rollback solution.

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The Recovery Operation

After the massive security breach, Bybit launched an aggressive recovery campaign, offering a 10% bounty—potentially worth $140 million—for assistance in retrieving the stolen cryptocurrencies. The exchange demonstrated remarkable resilience through a multi-faceted approach to restore its reserves.

Asset Freezing

In response to the attack, a coordinated effort led to the freezing of $42.89 million in stolen assets within a single day. Major crypto platforms, including Tether, THORChain, ChangeNOW, FixedFloat, Avalanche, CoinEx, Bitget, and Circle, swiftly blacklisted addresses linked to the hackers, preventing further movement of funds. This rapid intervention saw Tether freezing 181K USDT, FixedFloat locking 120K USDC and USDT, and ChangeNOW seizing 34 ETH, among other actions.

The ability to immobilize assets relied on a mix of centralized intervention and blockchain security mechanisms. While centralized platforms like Tether and Circle could directly freeze funds, decentralized systems, such as THORChain, implemented blacklist restrictions to prevent illicit transfers. This operation underscored the increasing role of compliance-driven asset control in mitigating crypto-related crime, although it also raised concerns about centralized influence over digital assets.

OTC Purchases to Restore Funds

Bybit executed a series of strategic over-the-counter purchases to replenish its holdings. Through a wallet identified as '0x2E45…1b77,' the exchange acquired 157,660 ETH valued at $437 million. The funds flowed through multiple channels, with significant purchases from prominent crypto investment firms Galaxy Digital, FalconX, and Wintermute.

The exchange secured additional ETH through various sources:

• Direct market purchases totaling $300 million
• Institutional loans amounting to nearly $300 million
• Whale deposits from major crypto firms

Within 48 hours, Bybit had amassed approximately 446,870 ETH—worth $1.23 billion—through this combination of loans, whale deposits, and direct purchases.

Support From Industry Players

The crypto community's response showcased unprecedented unity. Major exchanges blacklisted the hacker's wallets, preventing further movement of stolen funds. Tether demonstrated immediate support by freezing 181,000 USDT connected to the hack.

Several industry leaders stepped forward with substantial assistance:

• Bitget transferred 40,000 ETH ($106 million) from their own funds
• MEXC contributed 12,653 stETH ($33.9 million)
• Binance and other exchanges facilitated over 50,000 ETH in deposits

The recovery operation's success became evident as client activity rebounded to pre-hack levels within 24 hours. Bybit's operations quickly stabilized, with withdrawal requests dropping significantly. The exchange's transparency throughout the process, coupled with industry-wide support, helped maintain user confidence, evidenced by approximately $1.5 billion in new crypto asset deposits.

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Final Thoughts

The Bybit hack stands as cryptocurrency's largest security breach, with North Korea's Lazarus Group orchestrating a $1.5 billion theft through sophisticated social engineering tactics. Though the attack triggered massive user withdrawals and market volatility, Bybit's swift response demonstrated remarkable crisis management.

While some community members suggested an Ethereum blockchain rollback, technical limitations and potential ecosystem disruption made this solution unfeasible. Instead, Bybit secured its recovery through strategic over-the-counter purchases, institutional loans, and substantial support from industry players like Bitget and MEXC.

The exchange's transparent communication strategy, coupled with its ability to fully restore user funds within 48 hours, helped maintain market confidence. This incident highlights both the evolving threats in cryptocurrency security and the industry's capacity for collective response to major challenges.

Most significantly, Bybit's successful recovery proves that proper reserves and industry cooperation can overcome even the most severe security breaches. Their experience serves as a blueprint for other exchanges facing similar challenges, emphasizing the importance of robust security measures and emergency response protocols.

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