How Bybit Is Revamping Security After the Largest Hack Ever

TLDR

• In February, ByBit was hacked by the Lazarus Group for $1.5 billion.
• It was the largest crypto hack in history.
• This is how the team has responded and how they’re moving forward with security in mind.

Bybit, the world’s second-largest cryptocurrency exchange by trading volume, has been rewriting the rulebook on crypto security following a sophisticated cyberattack. It wasn’t just sophisticated. It wasn’t just an attack, either. It was the single largest breach in crypto history. 

The incident, which occurred in February, shook confidence in central exchanges (CEXs) worldwide. However, Bybit’s swift and calculated response has set a precedent for how platforms can recover, bolster defenses, and protect their users. 

“ByBit isn’t available in the US. So it doesn’t even affect us. What’s the point of this article?” The crypto industry is global. What can impact one exchange can impact another. We’re all a crypto family of sorts. What ByBit has learned about the hack and how it has strengthened its defenses can be applied by everyone, from users to exchanges, to make crypto a safer place. Let’s get after it. 

A Wake-Up Call for Crypto Exchanges 

The February cyberattack exploited vulnerabilities in an external multi-signature service used by Bybit. While the breach didn’t compromise the exchange’s own infrastructure or core security systems, it served as a stark reminder of the evolving threats facing even the most robust platforms. 

The attack triggered decisive action from Bybit’s leadership, prompting a comprehensive revamp of its security measures. The company has approached this challenge with three central focuses. 

Security Audits Uncover Vulnerabilities 

To address potential gaps in its systems, Bybit launched an immediate series of evaluations. Within just one month, the platform completed nine security audits led by both internal specialists and independent external experts. 

The results were immediate. Over 50 new security measures and recommendations were implemented — which targeted everything from process inefficiencies to previously unidentified vulnerabilities. 

Enhanced Cold Wallet Solutions 

Wallet security is a foundational pillar for users. The same is true for cryptocurrency exchanges. Prior to the attack, Bybit adhered to industry best practices in securing its wallets. But those methods proved vulnerable to the sophisticated schemes hackers are now deploying. 

Bybit responded by implementing a more rigorous cold wallet system. It’s designed to minimize vulnerabilities and enhance asset protection. The new framework includes multiple layers of defense:

• Updated Authorization Procedures: A revamped operational safety procedure (OSP) provides constant supervision by security experts.
• Advanced Multi-Party Computation (MPC): Bybit has adopted MPC to distribute sensitive information required for transaction authorization, reducing the risk of compromise.
• Hardware Security Modules (HSM): Provide hardware-level encryption to safeguard private keys.

Bank-Grade Information Security 

Data protection is another area where Bybit aims to raise the bar. The company has emphasized encryption at every level, ensuring data is protected in transit and at rest. 

Certified under ISO/IEC 27001, an international standard for information security, Bybit has implemented bank-grade encryption protocols typically used by major financial institutions. 

Key initiatives include:

• End-to-end encryption of all communications (including non-customer-facing exchanges).
• Optimized file systems to deliver persistent encryption of static data.
• Continuous risk management and system monitoring to deter potential threats.

Bybit’s CEO, Ben Zhou, noted that addressing security is not a one-time effort. “We are only as strong as our weakest link,” he stated. “Bybit has doubled down on fortifying our platform and procedures in the past two months in response to an increasingly challenging security landscape. We will continue to deliver secure, trustworthy, and user-friendly trading solutions that live up to our customers’ expectations.” 

Operational Resilience in the Face of Crisis 

Despite the scale of the attack, Bybit remained fully operational. The platform successfully handled a record number of user withdrawals within the first 12 hours after the breach, protecting customer assets and maintaining trust. 

Well…as best as they could maintain what they had left. Had they been unable to cover all of the withdrawals, things could have gotten really bad for the whole industry.

To further mitigate damages, the exchange established the Lazarus Bounty. It’s an open platform for tracking illicit fund transfers. To date, over $2.3 million in rewards has been distributed to participants aiding in the tracing of stolen funds. 

What Bybit’s Revamp Means for the Crypto Industry 

Bybit’s multi-tiered security overhaul comes at a pivotal time for the cryptocurrency sector. With the rising adoption and increasing amounts of money flowing through exchanges, the stakes are super high right now. 

Cybercriminals continuously refine their methods, and platforms have to evolve to stay ahead of bad actors. 

For users, Bybit’s actions serve as a reminder to prioritize security when choosing an exchange. While no platform can guarantee immunity from attacks, those that actively invest in cutting-edge safeguards demonstrate a commitment to protecting their users. 

Cobra Kai Crypto Never Dies 

The hack may have shaken the crypto industry, but it has also spurred innovation in security practices. Bybit’s rapid recovery, combined with its proactive security enhancements, has set a new standard for how exchanges should respond to cyber threats. 

Security should always be a top consideration. Bybit’s revamped systems are a testament to what’s possible when an exchange prioritizes transparency, resilience, and user protection. The question is, are you doing the same as a crypto user? These are your funds, and crypto has an incredibly limited safety net. Make it a priority now.