Major cryptocurrency exchange Bybit experienced over $5.5 billion in outflows following a significant hack attributed to North Korea’s Lazarus Group, which allowed hackers to deplete its ether cold wallet. Assets in associated wallets plummeted from approximately $16.9 billion to $11.2 billion. Bybit's CEO, Ben Zhou, disclosed that the breach resulted in the loss of around 70% of client ether, prompting the exchange to secure a loan to facilitate withdrawals, primarily of stablecoins instead of ether. A crucial component of the crisis was the temporary shutdown of Safe's smart wallet functionalities, which contained $3 billion in USDT that was inaccessible until further analysis could confirm security. Zhou’s team developed new software to verify signatures manually, allowing them to fulfill withdrawal requests amid escalating tensions. In light of the incident, Bybit has contacted authorities and engaged blockchain analysis firms, while also considering actions like a potential rollback of Ethereum to recover lost funds, though such measures would be controversial and require community consensus.

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