Bybit CEO Ben Zhou Confirms Ethereum Reserves Restored After Security Breach
Bybit CEO Ben Zhou recently announced that the exchange has successfully restored its Ethereum (ETH) reserves following a recent security breach that resulted in a loss of $1.4 billion. The exchange will soon release an updated proof-of-reserves report to demonstrate that it now holds client assets 1:1.
Replenishing Reserves
According to blockchain analytics firm Lookonchain, Bybit replenished its reserves through various methods:
- Over-the-counter (OTC) purchases
- Whale deposits
- Loans from major crypto platforms like Binance, Bitget, and HTX
The embattled exchange purchased 157,660 ETH worth approximately $437.8 million from investment firms such as FalconX and Wintermute through OTC transactions. Additionally, it acquired another $304 million in ETH from centralized and decentralized exchanges.
Fund Recovery Efforts
While Bybit has closed the platform’s ETH gap, it has also initiated fund recovery efforts:
- Launched a 10% bounty program to encourage ethical hackers and cybersecurity experts to assist in the recovery process
- Froze some stolen funds
The exchange has partnered with various crypto platforms to freeze and recover stolen assets. Bybit has successfully frozen approximately $43 million through collaborations with entities like Tether, ThorChain, Bitget, ChangeNow, Avalanche, Circle, and CoinEx.
Laundering Techniques
Despite recovery efforts, attackers have begun laundering the stolen funds using techniques similar to those employed by the Lazarus Group:
- Immediately converting stolen tokens into ETH through decentralized exchanges to evade asset freezing
- Converting ETH into Bitcoin using various trading services
Elliptic noted that funds were spread across 50 wallets within two hours of the attack, with at least 10% of the stolen assets already in motion. The attackers have also attempted to launder funds using memecoins on platforms like Solana’s Pump.Fun.
The swift action taken by Solana Foundation and Pump.Fun to block and remove the token highlights the importance of community-driven security measures in the crypto space.
