Lessons from the Bybit hack: how to store crypto safely

[harlan4096]

Takeaways for regular crypto holders from the biggest crypto heist in history.

February 21 was a dark day for the crypto market as it suffered the largest heist in its history. Attackers made off with around $1.5 billion from Bybit, the world’s second-largest crypto exchange, with experts citing it as the biggest theft – of anything – of all time. Although neither this loss nor the withdrawal of a further $5 billion by panicked investors were fatal for Bybit, the incident underscores the fundamental flaws in the modern crypto ecosystem, and serves up some valuable lessons for regular users.

How Bybit was robbed

Like all major crypto exchanges, Bybit secures stored cryptocurrency with multi-layered protection. Most funds are stored in cold wallets disconnected from online systems. When current assets need topping up, the required sum is manually moved from the cold wallet to the hot one, and the operation is signed by several employees at once. For this, Bybit uses a multi-signature (multisig) solution from Safe{Wallet}, and each employee involved in the transaction signs it using a private Ledger hardware cryptokey.

The attackers studied the system in detail and, according to independent researchers, compromised a Safe{Wallet} developer machine. Presumably, malicious modifications were made to the code for displaying Safe{Wallet} web application pages. But the logic bomb inside it was triggered only if the transaction source matched the Bybit contract address — otherwise Safe{Wallet} worked as usual. Having conducted their own investigation, the owners of Safe{Wallet} rejected the findings of the two independent information security companies, insisting that their infrastructure had not been hacked.

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