Bybit Repaid $100M Loan to Bitget After 3 Days, While Hacker Launders Stolen $250M in ETH

Bybit has returned a $100 million loan, equal to 40,000 Ethereum (ETH), to Bitget after just three days—the cryptocurrency community was not expecting this!

The loan was extended to Bybit when it was going through a tough time, and this rapid return of funds shows that Bybit is back and on the way to recovery. There was a lot of giggling going on in the hacker community when it looked like Bybit had lost half a billion dollars.

Bitget’s CEO, Gracy, expressed her views on the repayment of the loan and stated, “This was simply about supporting a peer in need.” She underscored that the no-interest, no-collateral loan, offered in the midst of a major security breach suffered by Bybit, was a gesture of goodwill. Despite its own recent troubles, Bitget decided to extend a helping hand to its competitor, which had not been in the news for the right reasons.

The hack that had stolen an enormous amount of ETH from Bybit had put the exchange in a vulnerable position. But Bitget’s decision to step in and provide the necessary funds allowed Bybit to recover swiftly. Gracy then expressed her confidence in Bybit’s ability to repay the loan, saying, “Great to see Bybit fully recovered, and we never doubted the return of the loan.” While the loan was indeed repaid, whether Shivers should get credit for the repayment is a more nuanced issue. The repayment, after all, was not exactly a “return on investment.”

As Bybit was working through its recovery, another troubling development occurred. A hacker managed to pull off an astonishing heist and steal 499,000 ETH, which was worth nearly $1.2 billion at the time of the breach. Within four days of this theft, the hacker had already laundered 100,000 ETH (worth about $250 million) using a series of complex techniques to cover their tracks and make the amounts reappear elsewhere, but not in the hacker’s hands.

The stolen ETH has been tossed through various methods to cleanse it, including splitting it into smaller amounts and sending it across multiple addresses. This makes the ETH much less visible and, by extension, much less traceable—at least, by any human trying to follow the money. Blockchain forensic experts working for the FBI, CIA, or other law enforcement agencies can still see all the transactions, but they can have a hard time making sense of them when the amounts being sent from one place to another are so varied.

The hacker is also using THORChain, a decentralized cross-chain liquidity protocol, to swap the stolen ETH into other cryptocurrencies, including Bitcoin (BTC), DAI, and various other assets. When he uses THORChain, he is essentially using a decentralized mechanism to swap assets in a way that is obscuring the trail of the funds. He’s using a liquidity protocol that isn’t on the Ethereum blockchain, making it more difficult to follow the funds after the swaps are made.

The hacker currently controls a mind-boggling 399,000 ETH. That amount is so staggering it makes the hacker not only the largest holder of the cryptocurrency but also by far the wealthiest player in the Ethereum ecosystem—more so, even, than its creator and figurehead, Vitalik Buterin, and the Ethereum Foundation itself. Alarm bells have gone off in the cryptocurrency space. Security concerns about large exchanges have been raised. And the increasingly sophisticated nature of the cybercriminals targeting digital assets has come under scrutiny.

The Bybit hack reminds us of the fragility of the cryptocurrency industry. Although decentralized systems furnish an alternate way to achieve security and transparency, they bring challenges of their own when it comes to protecting funds from bad actors. And it’s not just the bad actors that have come up with new schemes; the very nature of cryptocurrency exchanges and their business model seems to be under siege. The hack underscores a core problem: the virtual currency business is too vulnerable to being cleaned out.

While a hacker happens to be laundering a huge chunk of the stolen ETH, law enforcement and some pretty sharp folks working in the realm of blockchain are trying to get the funds back and figure out who’s behind the theft. But with 399,000 ETH still in the hacker’s hands and most likely being funneled across a number of different blockchain platforms, the job isn’t exactly an easy one.

The event has highlighted how crucial it is for exchanges to implement solid security and for there to be unceasing vigilance over blockchain operations. Even as the Bybit and Bitget exchanges attempt to recover from and fortify themselves against the incursions of this and other hackers, there is no doubt that the next cybercriminal adventure awaits somewhere in the shadows of the digital world.

Following these events, a number of people in the cryptocurrency community are urging the exchanges, regulators, and law enforcement agencies to work together—in an open and transparent manner, as they put it—to stop the seemingly unstoppable rise of crypto-related cybercrime. Until this collaboration happens, the arguments stemming from these positions suggest, we are going to continue to face substantial, and maybe even risible, threats that hit us in two ways: financially and in terms of the trust we place in platforms that offer us digital assets.

Bybit’s swift rebound and repayment of its loan from Bitget speaks volumes about the industry support and partnership one can have in the digital asset space. We work closely with many different partners, and along with our friends and family in the crypto asset space, we must confront the growing threat of cybercrime. Bybit’s experience doesn’t only highlight the danger that hackers pose but also serves as a wake-up call for the entire industry to implement and enforce better security measures.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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