Bybit Hack: A $1.5 Billion Crypto Heist and Its Market Impact

The cryptocurrency market was left reeling on February 21, 2025, as news broke of a massive security breach at Bybit, one of the world's leading cryptocurrency exchanges. In what is being hailed as the biggest crypto heist to date, hackers managed to steal over $1.5 billion worth of liquid-staked Ether (stETH) and MegaETH (mETH) from the exchange's cold wallet. This article explores the details of the hack, its impact on Bybit's financial stability and reputation, and its broader implications for the cryptocurrency market and investor sentiment.

The Dubai-headquartered exchange, founded in 2018, has grown to become one of the largest cryptocurrency exchanges globally, with a user base of over 10 million users. Bybit's popularity can be attributed to its user-friendly platform, innovative features, and strong focus on derivatives trading. However, the recent hack has raised serious concerns about the exchange's security measures and its ability to protect users' funds.

The hack, which involved the deployment of a malicious implementation contract on February 19, 2025, was executed through a sophisticated method known as "masked transactions." According to blockchain security firm SlowMist, the attacker manipulated the contract by replacing a legitimate multi-signature wallet contract with a malicious one. This manipulation allowed the attacker to gain control over the Ethereum cold wallet used by Bybit, which held a significant amount of ETH. The malicious contract involved multiple signatures, which masked the attacker's actions, making it harder to detect.

Ben Zhou, the founder of Bybit, confirmed the breach and emphasized the impact on Bybit's cold storage. He stated that the ETH cold wallet was the only one affected, while other wallets remained secure. Zhou also assured customers that their funds were not at risk. However, as the investigation continued, the breach caused widespread concern about the security of cryptocurrency exchanges.