Bybit hack sent ripples through the industry after $1.4 billion in Ether-related tokens was stolen

The fallout from the hack has left many people wondering what went wrong, whether their own funds are safe, and what should be done to prevent such an event from happening again.

The February hack against Bybit sent ripples through the industry after $1.4 billion in Ether-related tokens were stolen from the centralized exchange, reportedly by the North Korean hacking collective Lazarus Group, in what was the most costly crypto theft ever.

The fallout from the hack has left many people wondering what went wrong, whether their own funds are safe, and what should be done to prevent such an event from happening again.

According to blockchain security company CertiK, the massive heist represented roughly 92% of all losses for February, which saw a nearly 1,500% increase in total lost crypto from January as a result of the incident.

On Episode 57 of Contelegraph’s The Agenda podcast, hosts Jonathan DeYoung and Ray Salmond speak with CertiK’s chief business officer, Jason Jiang, to break down how the Bybit hack happened, the fallout from the exploit, what users and exchanges can do to keep their crypto secure, and more.

Are crypto wallets still safe after Bybit hack?

Put simply, Lazarus Group was able to pull off the massive hack against Bybit because it managed to compromise the devices of all three signers who controlled the multisignature SafeWallet Bybit was using, according to Jiang. The group then tricked them into signing a malicious transaction that they believed was legit.

Does this mean that SafeWallet can no longer be trusted? Well, it’s not so simple, said Jiang. “It is possible that when the Safe developer’s computer got hacked, more information was leaked from that computer. But I think for the individuals, the likelihood of this happening is rather low.”

He said there are several things the average user can do to drastically increase their crypto security, including storing assets on cold wallets and being aware of potential phishing attacks on social media.

Source: CertiK

When asked whether hodlers could see their Ledger or Trezor hardware wallets exploited in a similar manner, Jiang again said that it’s not a big risk for the average user — as long as they do their due diligence and transact carefully.

“One of the reasons that this happened was that the signers were like a blind-send-signing the order, just simply because their device did not show the full address,” he said, adding, “Make sure that the address you are sending to is what you’re intending to, and you want to double check and triple check, especially for larger transactions.”

How to prevent the next multibillion-dollar exchange hack

Jiang pointed to a lack of comprehensive regulations and safeguards as a potential element contributing to the ongoing fallout from the hack, which fueled debates over the limits of decentralization after several validators from crosschain bridge THORChain refused to roll back or block any of Lazarus Group’s efforts to convert its funds into Bitcoin (BTC).

“Welcome to the Wild West,” said Jiang. “This is where we are right now.”

“From our view, we think crypto, if it is to be flourishing, it needs to hug the regulation. To make it easy to be adopted by the mass general here, we need to hug the regulation, and we need to figure out ways to make this space safer.”

Related: Financial freedom means stopping crypto MEV attacks — Shutter Network contributor

Jiang commended Bybit CEO Ben Zhou on his response to the incident, but he also pointed out that the exchange’s bug bounty program prior to the hack had a reward of just $4,000. He said that while most people in cybersecurity are not motivated by money alone, having larger bug bounties can potentially help exchanges stay more secure.

When asked about the ways exchanges and protocols can motivate and retain top-tier talent to help protect their systems, Jiang suggested that security engineers don’t always get the credit they deserve.

“A lot of people say that the first-degree talent goes to the developers because that’s where they will get most rewarding,” he said. “But it’s also about us giving enough attention to the security engineers. They carry a huge responsibility.”

To hear more from Jiang’s conversation with The Agenda — including how CertiK carries out audits, how quantum computing and AI will impact cybersecurity, and more — listen to the full episode on Cointelegraph’s Podcasts page, Apple Podcasts or Spotify. And don’t forget to check out Cointelegraph’s full lineup of other shows! 

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.