Why Your Assets Are Unaffected By The ByBit Hack

Hi Reader,

In case you missed our weekly newsletter that went out yesterday, I just wanted to mention the ByBit hack again as it's quite important when thinking about the custody and security of your digital assets.

First of all, rest assured, at BlockByte we use Fireblocks, the leaders in institutional-grade custody with over $100B in assets under management. Their security mechanisms are EY audited and SOCII certified which is considered one of the highest standards for security compliance in the financial services industry. Something unfortunately that ByBit was not.

Unlike some exchanges, Fireblocks segregate multiple pools of funds and split the private keys across various servers and devices using MPC technology to minimise chances of a breach. Fireblocks wrote extensively on the risks that some exchanges face, including instances of device breaches and how to prevent them here.

What Exactly Happened To ByBit?

On Feb 21st, ~US $1.5B (449.395 ETH) was stolen by North Korean hackers Lazarus Group from ByBit exchange. This was the largest hack known to date. ByBit which holds ~$20B in assets was breached as hackers manipulated what was seen on the screen of the cold storage signing devices. According to Binance CEO, Changpeng Zao, the hackers were "able to make the front-end user interface show a legitimate transaction while the actual signing was for a different transaction". Since the breach, over $5.5B of withdrawals have been made from ByBit, all of which have been processed successfully, with the founder Ben Zhou saying that the company has sufficient funds to cover the losses.

In closing, we believe in the importance of working with the best in the world when it comes to securing your digital assets and invite any of our clients to ask questions on this important topic. As we reflect on this breach, the good news is that ByBit operated with integrity having backed their customer deposits with assets exceeding 1:1, allowing for full redemptions of withdrawals. The hack also exposed an new attack vector which all custody providers will now work to diligently close of to prevent future incidences.

Thanks for your trust in BlockByte,
James

James Brannan
Chief Executive Officer
BlockByte Capital
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(+61) 412 393 634
​james@blockbyte.com.au​
​https://blockbyte.com.au/​

BlockByte does not provide financial advice. We provide execution support, research and insured custody for investing in digital assets. Reach out to our team to discuss how we can help.

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