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On February 21, 2025, attackers stole about $1.46 billion in Ethereum-linked assets from one Bybit cold wallet. The FBI later attributed the theft to North Korea’s TraderTraitor operation; private investigators linked it to the Lazarus Group. Bybit kept withdrawals operating and said it restored 1:1 reserve coverage within roughly 72 hours—but that replenishment was not recovery of the stolen coins.
What happened at Bybit?
Bybit said the incident began during what appeared to be a routine transfer from an Ethereum cold wallet to a warm wallet. The signing workflow was manipulated so the transaction looked legitimate to the people approving it. Attackers then changed the targeted wallet’s control logic and moved its assets to an address they controlled. Bybit reported that one Ethereum cold wallet was compromised and that its other major wallets were unaffected. Bybit’s incident timeline describes the event and its response.
The theft was widely called the largest cryptocurrency hack or theft at the time, in February 2025. That is a dated ranking, not a permanent one. The dollar figure is also an estimate based on asset prices at the time, not a fixed measure of what those tokens are worth today.
How much was stolen?
The FBI and many news reports rounded the loss to about $1.5 billion. Bybit’s more detailed accounting put it at approximately $1.46 billion and listed four Ethereum-related assets:
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| Asset | Amount | Approximate value reported by Bybit |
|---|---|---|
| ETH | 401,347 | $1.12 billion |
| stETH | 90,375 | $253.16 million |
| cmETH | 15,000 | $44.13 million |
| mETH | 8,000 | $23 million |
So the loss was not entirely plain ETH: much of it consisted of liquid-staking or wrapped assets linked to Ethereum. The rounded $1.5 billion and the more specific $1.46 billion are compatible descriptions, not competing counts of the same dollar value at every later date. Bybit’s breakdown gives the asset-level figures.
How the signing workflow was compromised
The available forensic accounts point to a compromise of the interface and infrastructure used in the signing process, not a demonstrated break of Ethereum’s base layer. Bybit used Safe{Wallet}, a third-party multisignature wallet platform. A later investigation by cybersecurity firm Sygnia described social engineering against a Safe developer, theft of session credentials, misuse of cloud resources and malicious JavaScript served through Safe-related infrastructure. The injected code reportedly manipulated what Bybit signers saw when they reviewed the transaction.
In simplified terms, the sequence was:
- A developer environment associated with Safe was compromised through social engineering.
- Attackers obtained access or session material tied to cloud resources.
- Malicious code was inserted into or served through the wallet interface used in the approval flow.
- Signers were shown a representation that appeared consistent with a legitimate transfer, while the transaction’s effective behavior altered the wallet’s control path.
- After approval, the attacker transferred the assets out and dispersed them among many addresses.
Sygnia’s account adds details including the reported compromise of a developer’s macOS workstation, AWS access and an attempted registration of a fraudulent MFA device. These are findings attributed to that investigation, rather than a court finding about the identity of individual attackers. See Sygnia’s technical overview and its investigation summary.
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This distinction matters: “cold wallet” does not necessarily mean an entirely offline, air-gapped system. A multisignature cold-storage setup may rely on signing machines, wallet software, browser interfaces, cloud-hosted code, hardware devices and human review. The private keys need not be stolen directly for an attacker to exploit the process that constructs and displays a transaction. Multisig reduces the risk of a single stolen key being enough, but it cannot protect signers who approve malicious instructions presented through a compromised interface.
Why investigators linked the theft to North Korea and Lazarus
Attribution has different levels of certainty and should be described precisely. The FBI formally attributed the theft to North Korea and called the activity TraderTraitor. It said the stolen assets were being rapidly converted and dispersed across thousands of addresses on multiple blockchains. The FBI’s public notice is the government attribution.
Separately, blockchain analytics firm Chainalysis and private forensic investigators linked the operation to Lazarus Group activity based on fund movements, attack methods and similarities to earlier DPRK-associated operations. Those assessments provide context for the FBI attribution, but they are not a criminal conviction establishing the identity of each person involved. Chainalysis’ analysis discusses tracing and the broader DPRK-linked pattern.
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Bybit’s response: withdrawals, reserves and a recovery effort
The hack immediately raised a practical question for customers: could they withdraw, and could Bybit meet its obligations? Bybit disclosed the incident publicly, its chief executive addressed it in a livestream, and the exchange continued processing withdrawals. Bybit reported more than 350,000 withdrawal requests, with 99.994% processed within 10 hours.
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1Repair Windows errors before they cause bigger problems2Scan for outdated or missing drivers - takes under a minute3Clear out junk files and repair common Windows errorsTo close the ETH reserve gap, Bybit said it sourced assets through bridge loans, over-the-counter purchases, whale deposits and support from industry partners. It reported that customer-asset reserve coverage returned to a 1:1 ratio within about 72 hours. Hacken reviewed the relevant proof-of-reserves material; Bybit’s announcement describes the review and its scope. The exchange also launched a recovery bounty offering up to 10% of recovered stolen funds. See Bybit’s 72-hour reserve announcement and its recovery bounty announcement.
These are three separate outcomes: withdrawals continued; the exchange said it replenished reserves backing customer claims; and the original stolen assets would need to be traced and returned to count as recovered. Bybit’s reserve response supports the first two, not the third. The FBI described the assets as dispersed and subject to further laundering and conversion. The available evidence does not establish that the original haul was fully recovered.
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Did Bybit remain solvent?
Bybit said it remained solvent and reported sufficient reserves for in-scope customer liabilities in its proof-of-reserves materials. A Hacken review published shortly after the incident reported 1:1 coverage for the assets it examined. Bybit has also published later proof-of-reserves reports, including reports dated November 19, 2025 and May 27, 2026.
That evidence is relevant, but it is not a blanket guarantee of the exchange’s financial condition or future ability to meet every obligation. Proof-of-reserves reporting is tied to a date, scope and methodology. It does not, by itself, establish the quality of every liability calculation, operational control, governance process or counterparty exposure, nor does it show that stolen tokens have been recovered. Read any reserve claim with the report’s date and coverage in mind. Bybit’s May 2026 report is a later snapshot, not evidence that the 2025 theft was undone.
What the incident means for crypto custody
The Bybit case was a major security failure in a signing workflow, but it does not show that Ethereum itself was cryptographically broken. Nor does it mean that multisignature wallets are useless. It shows that custody depends on more than key storage: the code that builds a transaction, the interface that renders it, the devices and accounts used by signers, and the policies governing approval all matter.
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- Verify what the transaction does, not only what a screen says. For high-value transfers or changes to wallet logic, organizations need independent transaction rendering and a way to verify destination, permissions and contract changes outside the potentially compromised interface.
- Treat vendors and developer environments as part of the custody perimeter. A third-party interface can be a critical link even if the exchange controls its own signers and keys.
- Use policy controls and out-of-band checks. Separate approval channels, transaction simulation, limits and additional scrutiny for contract upgrades can make a deceptive request harder to pass.
- Plan liquidity and communications before an incident. Bybit’s ability to keep withdrawals open and source assets helped contain customer panic, but emergency funding and replenishment raise questions users should assess for any exchange.
What customers can do
This incident alone cannot establish whether an exchange is safe or unsafe for every customer. The right balance depends on whether you need trading liquidity, how long you plan to hold assets, your jurisdiction and your ability to manage self-custody securely. Consider the following practical steps:
- Keep on an exchange only the amount you need for active trading or near-term use, if that fits your circumstances.
- Review the exchange’s withdrawal process, security options, reserve-report scope and jurisdiction-specific terms. A reserve snapshot is one input, not a complete risk assessment.
- Enable phishing-resistant hardware authentication for exchange, email and password-manager accounts where supported, use unique credentials, and secure account recovery methods.
- For long-term self-custody, understand seed-phrase backup, recovery and inheritance before moving a significant balance. Test the process with a small amount first.
- Verify addresses and transaction details through an independent channel. A hardware wallet does not automatically prevent phishing or a misleading signing interface.
- Be wary of unsolicited messages promising to recover stolen crypto. A recovery bounty or investigation does not legitimize an unknown party asking for seed phrases, private keys or advance payments.
Self-custody reduces reliance on an exchange but shifts responsibility to the owner: lost seed phrases, malware, phishing, signing mistakes and poor recovery planning can be irreversible. Institutional custody may offer additional governance and policy controls, but introduces fees, onboarding, counterparty dependence and possible withdrawal constraints. Neither approach removes risk; the useful question is which risks you can understand and manage.
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