Over 68% of Stolen Funds are Traceable: Bybit CEO Ben Zhao

• Bybit CEO stated that over 68% of the stolen funds are traceable and will soon be recovered.
• The hackers used mixers and cross-chain platforms to launder the stolen Ethereum.
• To aid in the recovery of the stolen money, Bybit started the Lazarus Bounty program.

Bybit, a notable cryptocurrency exchange, experienced a severe loss in February after a hacker compromised an Ethereum cold wallet, stealing over $1.4B in liquid-staked ETH and ERC-20 tokens. Following the incident, the exchange announced that it had traced 88% of the stolen funds, while 7.59% had vanished.

Providing the latest update on his X profile, Ben Zhao,  the CEO of Bybit, stated that nearly 68% of the stolen Ethereum (ETH) remains traceable, providing hope for potential recovery despite the sophisticated methods used by the hackers to launder the funds.

As of the latest update, Zhou revealed that “68.57% remain traceable, 27.59% have gone dark, and 3.84% have been frozen.” This assessment clarified the flow of the stolen funds and the ongoing revenue hunt efforts. For the most part, the movement was through mixers, cross-chain bridges, and over-the-counter (OTC) fiat exchanges, complicating the laundering process.

Detailed Analysis of Stolen Funds and Laundering Techniques

The stolen assets were largely moved via mixers and cross-chain platforms to obscure their origin. The CEO shared that a substantial portion of the stolen funds flowed through the Wasabi mixer, linked to the North Korean cybercriminals, particularly the Lazarus Group. Further, some funds entered CryptoMixer, Tornado Cash, and Railgun before being transferred to other cross-chain bridges like Thorchain, exCh, Lombard, LiFi, Stargate, and SunSwap.

According to a report, 432,748 ETH (84.45% of the total) was moved from Ethereum to Bitcoin via Thorchain. Significantly, 342,975 ETH, equivalent to approximately $960.33 million (67.25% of the stolen funds), was converted into 10,003 BTC and dispersed across 35,772 wallets. The average amount per wallet was approximately 0.28 BTC. Furthermore, 5,991 ETH, or $16.77 million (1.17% of the stolen funds), remains on the Ethereum blockchain, stored in 12,490 wallets.

Lazarus Bounty Program and Recovery Efforts

To track the stolen funds, Bybit introduced the Lazarus Bounty program, offering incentives for clues that would lead them to the funds. Zhou stated that they have received over 5,443 bounty reports in the last 60 days, with over 2,000 reports weekly. He added that with the reports, new tools are being developed to decode mixers, which help to trace the funds.  

Zhou’s proactive stance highlights Bybit’s commitment to transparency and recovery. The bounty program aims to incentivize individuals to provide information, focusing on the complex tracing of the laundered funds, particularly those funneled through mixers like Wasabi and Tornado Cash.

Related: eXch to Shut Operations After Being Tied to Bybit Hack

A New Era for Crypto Security

The Bybit hack raised the bar on how crypto exchanges and law enforcement could approach cybercrime activities concerning digital assets. Zhou’s insights open a new window into the increasingly nuanced ways in which crypto laundering and its related tools obfuscate the processes. Mixers and cross-chain platforms require their incorporation, making standards for exchanges to procure better tools for tracking and collaboration with the world’s authorities.

As threats emerge in the crypto landscape, Zhou’s candidness and Bybit’s other actions to retrieve lost assets would inspire other exchanges to boost credentialing security arrangements. Furthermore, it highlights the requirement and necessity of legal manifestations and partnerships across the crypto ecosystem to combat cybercrime.

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