Analysts blame deregulation for $1.5 billion Bybit hack

Bybit, a Dubai-based crypto exchange handling $36 billion in daily trades, suffered a $1.5 billion theft from an Ethereum cold wallet, the largest crypto theft on record. Bitcoin's price dropped roughly 3% following the news, from $98,000 to about $96,000. On-chain analysis linked the stolen Ethereum to North Korea's Lazarus Group, a cybercrime unit known for attacks like the $235 million WazirX hack and the $50 million Radiant Capital breach. Lazarus Group typically converts stolen tokens to Ethereum, then Bitcoin, and uses mixers to obscure transactions before cashing out, a process that can take years. Bybit secured a loan to cover withdrawals, but must repay it, meaning they will likely buy Ethereum on the market, potentially pushing its price up. Conversely, Lazarus Group's selling of Ethereum for Bitcoin could create long-term downward pressure on Bitcoin's price. Bybit experienced a surge in withdrawal requests after the hack, with 350,000 requests within 10 hours, straining their processing capabilities. Despite having $16.2 billion in reserves, the theft represented a 9% loss of their total assets. A $106 million loan in Ethereum from the Bitget exchange helped Bybit stabilize withdrawals. Chainalysis reports that Lazarus Group funnels stolen crypto into North Korea's weapons programs. In 2021, Lazarus Group stole $400 million, with Ether comprising 58% of the stolen funds. Bybit claims to have processed all withdrawal requests 12 hours after the hack and promises a full incident report.