Someone just pulled off the biggest exchange heist since Mt. Gox went bust.

Bybit's ETH cold wallet just got drained for all it’s worth – we're talking $1.4B in ETH and staked ETH stolen in one fell swoop.

The hackers are unloading their ill-gotten gains as we speak, and the market is still processing the reality of the situation. 

How Did This Happen?

The hackers pulled some very advanced moves on Bybit's multisig system.

They made the wallet think it was doing a normal transfer to the warm wallet when it was actually transferring all of the funds to an address controlled by the hacker.

It turns out the smart contract was totally secure, but the spoofed interface made the operators think it was business as usual when it most certainly was not. 

So far, ETH barely noticed it had just lost $1.4B of itself, and Bitcoin dipped slightly on the news – the verdict is still out as to whether this is just the industry processing the gravity of the hack or the markets are now liquid enough to where this amount isn’t even an issue for other exchanges to absorb this kind of sell pressure. 

All in all, the total market cap dropped less than your average NFT floor price.

Bybit's Damage Control

Ben Zhou is tweeting faster than a degen trying to find alpha, saying that everything else is safe. 

Hopefully, this is “Funds are Safu” CZ sort of safe, and not Do Kwon “Steady lads” sort of safe. 

But one has to wonder – this is a lot of capital, so can they actually cover the loss without breaking the bank? 

They've got countless blockchain detectives already on the case, following this winding on-chain drama with every token transfer and swap.

ZachXBT is already tracking the movements like a bloodhound, while Arkham is throwing out bounties like they're trying to speedrun a manhunt – everything moves so much faster in crypto.

The Big Heist And Big Picture

This might be the biggest hack in crypto history (so far) – and it proves that even the most secure wallets aren't as secure as we might have thought.

If one of the major exchanges can get spoofed for over a billion, then we smaller fish need to keep our wits about us and ensure we’re not plugging our hardware wallets into any old machine. 

And through all of this, the market has somehow been more stable than the price of USDC.

So, multisig wallets might need a serious upgrade, exchanges are about to go paranoid with their security, and we’re all reminded that if it’s not your keys, it’s not your crypto.

Now, the next question: How on Earth do you launder $1.4B worth of ETH?