Ethereum Price Dives as Bybit Suffers Largest Crypto Hack Ever—$1.4B Lost

Key Insights:

• Bybit’s $1.4B hack is the largest crypto theft in history.
• ZachXBT linked the attack to North Korea’s Lazarus Group.
• Ethereum dropped 4% as panic and liquidations followed the Bybit exploit.

Following news of a hacking incident with Bybit, the Ethereum price fell by 4%. The traders anticipated a huge sell-off due to the tainted cash.

Bybit suffered a staggering $1.4 Billion exploit on February 21, making it the most significant crypto hack in history. The cryptocurrency industry is reeling after the incident.

Hackers siphoned off 401,347 ETH and other Ethereum-based assets, surpassing all previous breaches by a wide margin.

Bybit Hack and Its Ripple Effect on Ethereum Price

In a shocking revelation, Bybit confirmed the massive breach. This was attributed to attackers who tricked the exchange’s cold wallet signers into approving a malicious transaction. This allowed them to gain control over the assets undetected.

Before the Bybit heist, December 2024 saw the lowest crypto scam losses | Source: CertiK

Blockchain security firms, including Elliptic and CertiK, quickly identified and labeled the hacker’s addresses. They aimed to prevent any attempts to cash out through other exchanges.

On Feb. 22, blockchain investigator ZachXBT submitted definitive proof that Lazarus Group orchestrated the Bybit attack.

His report, released by Arkham Intelligence, included test transactions, associated wallets, and forensic graphs. It also featured timing analysis. This linked the hackers to past North Korean-sponsored breaches.

“BREAKING: BYBIT $1 BILLION HACK BOUNTY SOLVED BY ZACHXBT,” Arkham Intelligence posted on X.

Ethereum price dropped significantly due to this breach. The Lazarus Group has a long history of targeting crypto exchanges and DeFi platforms. Estimates suggest they stole over $1.34 Billion worth of crypto in 2024 alone.

Ethereum Price Takes a Beating as Traders Brace for More Volatility

ETH price tumbled 4%, dropping from $2,850 to $2,619 as panic spread. With Bybit’s massive Ethereum stash compromised, traders feared an immediate sell-off.

Data from Coinglass revealed that ETH futures saw $136.35 Million in liquidations. At the same time, $66.35 million was observed for long positions and $70 Million for shorts.

Before the attack, Ethereum open interest (OI) had surged by 250,000 ETH. This happened as traders expected an Ethereum price breakout above $2,900. However, OI fell sharply to 8.60 million ETH after the hack, reflecting market uncertainty.

Market analysts had expected Bybit to recover lost funds by purchasing large amounts of ETH from the open market. They anticipated that this could fuel demand ahead.

However, Bybit CEO Ben Zhou clarified in an X livestream that the exchange would not buy back ETH. Instead, Bybit secured a bridge loan covering 80% of the stolen funds, ensuring customers’ withdrawals remained unaffected.

Ben Zhou's Livestream on the Latest ETH Wallet Incident LIVE now. https://t.co/mBwD9ubGIl

— Bybit (@Bybit_Official) February 21, 2025

Initially, market speculation suggested Bybit would have to buy large amounts of ETH to cover customer losses. That could have boosted the Ethereum price. However, Bybit CEO Ben Zhou quickly shut down those rumors.

Crypto’s Growing Hack Economy: How Safe Are Your Funds?

The Bybit hack is the latest blow in a long line of high-profile crypto heists. Reports from Crystal Intelligence reveal that crypto hacks had already surpassed $19 Billion by mid-2024.

In comparison, past breaches—including the Ronin Network’s $600 Million exploit in 2022—now seem minor.

Hacks and scams have eroded trust in centralized exchanges, with critics calling for tighter security measures. Cryptocurrencies are perceived to be volatile, with regulatory concerns and the possibility for misuse in criminal operations.

Despite this, Chainalysis data suggested that legitimate crypto use cases are growing faster than criminal activity. Even Binance’s former CEO, Changpeng Zhao (CZ), offered advice on the crypto hack.

“Not an easy situation to deal with,” CZ posted on X. He recommended a withdrawal halt as a security measure.

Not an easy situation to deal with. Might suggest to halt all withdrawals for a bit as a standard security precaution. Will provide any assistance if needed. Good luck! 🙏

— CZ 🔶 BNB (@cz_binance) February 21, 2025

Meanwhile, Arkham Intelligence launched a bounty of 50,000 ARKM to help identify the hacker behind the Bybit exploit. “We’ve created and funded a bounty to help identify the person or organization behind today’s [over] $1 billion Bybit hack,” the firm posted.

Bybit ETH multisig cold wallet just made a transfer to our warm wallet about 1 hr ago. It appears that this specific transaction was musked, all the signers saw the musked UI which showed the correct address and the URL was from @safe . However the signing message was to change…

— Ben Zhou (@benbybit) February 21, 2025

Bybit maintains that it remains solvent despite the record-breaking loss. “All client assets are 1-to-1 backed, and we can cover the loss,” CEO Zhou reassured users on X. While this may ease panic among traders, the hack highlights the ongoing security risks in the crypto space.

With the Ethereum price recovering, traders are closely watching for further developments. Moving ahead, the investigation into Lazarus Group’s involvement continues.

Disclaimer

In this article, the views and opinions stated by the author or any people named are for informational purposes only, and they don’t establish the investment, financial, or any other advice. Trading or investing in cryptocurrency assets comes with a risk of financial loss.