Bybit co-founder and CEO Ben Zhou announced that the cryptocurrency exchange had successfully replenished its Ethereum (ETH) reserves following a record-breaking exploit on February 21, which resulted in the theft of over 400,000 ETH, valued at approximately $1.4 billion. Bybit aims to provide transparency and reassure its users by releasing an audited proof of reserves report soon.
The exchange addressed the deficit in its ETH reserves by securing emergency liquidity through bridge loans from crypto industry partners, alongside whale deposits and ETH purchases, as indicated by on-chain data from Lookonchain. These measures were taken to ensure Bybit could satisfy user withdrawal demands and maintain operational stability.
Bybit's swift response to the crisis included the acquisition of substantial amounts of ETH through over-the-counter (OTC) transactions to rebuild its reserves. Zhou had previously assured users of the exchange's solvency, stating that Bybit's treasury and retained earnings were ample to cover the losses incurred by the exploit.
The $1.4 billion attack targeted Bybit's multi-signature cold wallet during a routine transfer to a warm wallet. The attackers, believed to be part of the North Korean Lazarus Group, manipulated the transaction by presenting a fake user interface (UI), which masked a malicious smart contract. This allowed them to redirect the assets to an address under their control.
With the ETH reserves now restored, Bybit is positioned to process all withdrawal requests as usual. The upcoming audited proof of reserves report will leverage a Merkle tree to demonstrate the exchange's return to a full 1:1 ratio of client assets, as per Zhou's statement.
