Chainflip Acts Swiftly to Block Bybit Hack Funds

Crosschain trading protocol Chainflip has implemented an emergency software upgrade to prevent hackers from moving funds stolen in the $1.4 billion Bybit exploit. The move comes after the Feb. 21 Bybit hack, the largest crypto exchange breach in history, which has seen blockchain investigators, analytics firms, crypto exchanges, and network protocols working together to trace and recover the stolen funds.

The protocol announced the "1.7.10" upgrade on Feb. 24, stating that it aims to block illicit transactions and protect liquidity providers from exposure to stolen funds. In its announcement, Chainflip said that the flow of illicit funds through the protocol exposes liquidity providers to risk, which could compromise the protection of general users. The protocol acted quickly to cut off access to the main interface after flows from the Bybit hack were spotted on Saturday morning.

Chainlink also worked with its providers to ensure that Bybit funds are not siphoned through its decentralized crosschain services. The latest upgrade is expected to go live by or before Feb. 27, following internal testing of the code and network deployment. The upgrade includes an upgrade to the existing broker-level screening tools available to all broker operators, allowing operators to block incoming Bitcoin (BTC) transfers based on risk profiling. This feature is now being extended to Ethereum and all ERC-20 tokens.

As a result of the upcoming upgrade, any crypto wallets linked to the Bybit hack or any other prominent security incident will be unable to use Chainflip services. Additionally, the protocol plans to introduce more features based on the need for user protection. Chainflip has hinted at proactive measures being taken across the crypto ecosystem after the Bybit hack, stating that "We do not need regulators to tell us what to do in this situation. There are sufficient commercial reasons for the ecosystem to take these steps, not just ethical ones."