Bybit Security Risk Assessment Tool
Your Security Risk Assessment
Cold Wallet Storage
Bybit stores over 90% of user funds in offline cold wallets, providing strong protection against online attacks.
Multi-Signature
All withdrawals require multiple cryptographic signatures, preventing unauthorized transactions.
When you hear the name Bybit a global cryptocurrency exchange that offers spot, derivatives, and margin trading, you probably expect a slick interface and solid security. Bybit review has become a hot search after the massive February 2025 breach that shook the entire crypto world.
TL;DR - Quick Take
- Bybit survived a $1.5billion Ether theft and compensated users from its own reserves.
- Security stack includes cold wallets, multi‑signature, TSS, 2FA, and hardware authentication.
- The hack exploited supply‑chain and smart‑contract flaws, not just hot‑wallet weaknesses.
- Bybit’s post‑hack response was fast, but the incident raised doubts about custodial exchanges.
- Consider self‑custody or platforms with independent transaction verification for extra safety.
What Is Bybit and How Does It Work?
Founded in 2018, Bybit quickly grew into one of the top‑ranked crypto exchanges, serving millions of traders across 200+ markets. The platform supports spot trading, perpetual contracts, and leveraged products, all accessed via web, mobile apps, and API endpoints.
Key features include:
- Advanced charting tools and order types for professional traders.
- Liquidity pools that keep spreads tight even during volatile periods.
- Deposits and withdrawals in major cryptocurrencies, with fiat on‑ramps in select regions.
Security Architecture Before the Breach
Bybit’s security blueprint relies on several layers designed to keep user assets safe.
Cold Wallets: The majority of user funds are stored offline, isolated from any internet‑connected system.
Multi‑signature (Multisig) and Threshold Signature Scheme (TSS): Transaction approvals require multiple cryptographic signatures, reducing the risk of a single point of failure.
Two‑Factor Authentication (2FA) and hardware keys: Users must provide a time‑based one‑time password or a hardware token before logging in or withdrawing.
Additional safeguards include end‑to‑end encryption of sensitive data, real‑time behavioral analytics, and human‑computer interaction checks for high‑risk actions.
The February 21, 2025 Heist - How It Happened
On February 21, 2025, a coordinated attack siphoned roughly Ether (ETH) Ethereum’s native cryptocurrency worth $1.5billion from Bybit’s hot‑wallet infrastructure. The perpetrators were identified as the North Korean Lazarus Group a state‑sponsored hacking collective known for high‑value crypto thefts.
Security analysts say the attack blended classic social engineering with sophisticated supply‑chain malware. By compromising a developer’s workstation, the hackers introduced malicious code that altered transaction signing logic, bypassing the multi‑signature checks and tricking operators into approving the massive transfer.
Key vulnerabilities exploited:
- Insufficient protection of the software supply chain - no mandatory cryptographic code signing.
- Weak independent transaction verification - operators could approve large moves without a second‑party audit.
- Smart‑contract permission misconfigurations - the contract governing withdrawals allowed broader access than intended.
These gaps proved that even robust cold‑wallet and multisig setups can be circumvented when the signing process itself is compromised.
Bybit’s Response: Compensation and Community Reaction
Within days, Bybit announced that it would cover the full $1.5billion loss from its own reserves. The exchange kept its withdrawal pipelines open, processing hundreds of requests without major delays.
Users praised the swift payout but remained uneasy about the underlying security flaws. The incident sparked a surge in interest for self‑custody wallets and heightened scrutiny of custodial platforms.
Bybit also launched a bounty program, promising 10% of recovered funds to ethical hackers and cooperating exchanges. The program yielded $43million, a modest sum compared to the original theft.
Comparative Security Snapshot - How Does Bybit Stack Up?
| Feature | Bybit (2025) | Industry Average |
|---|---|---|
| Cold‑wallet storage | >90% of assets | ~75% |
| Multi‑signature / TSS | Implemented on all withdrawals | Partial implementation |
| 2FA & hardware keys | Mandatory for withdrawals | Optional for many platforms |
| Supply‑chain code signing | Not enforced (vulnerability) | Varies, often missing |
| Independent transaction verification | Ad‑hoc, post‑breach improvements planned | Rare |
| Smart‑contract permission audits | Performed annually, but gaps existed | Inconsistent |
The table shows that while Bybit leads on several front‑line defenses, the industry as a whole still struggles with deeper process safeguards like supply‑chain integrity and multi‑party transaction approval.
Expert Commentary - Lessons from the Hack
Luke Riley, Head of Innovation at Quant Network a firm focused on enterprise‑grade blockchain security solutions, argued that “enterprise‑grade transaction signing” could have stopped the attack. He recommends adding cryptographic code signing, Subresource Integrity checks, and mandatory multi‑party reviews for any wallet UI changes.
Security researchers also suggest deploying Cloud Security Posture Management (CSPM) tools to flag unauthorized cloud‑key usage, and using hardware security modules (HSMs) for key storage instead of software‑based TSS alone.
What Should Traders Do Next?
If you’re already on Bybit, consider the following steps:
- Enable hardware‑based 2FA (e.g., YubiKey) for every login and withdrawal.
- Shift a portion of long‑term holdings to a reputable cold‑wallet you control personally.
- Monitor your account’s activity using Bybit’s real‑time behavior alerts; set tighter thresholds for large withdrawals.
- Stay informed about any new security patches or policy updates from Bybit.
For new users, evaluate exchanges that already incorporate independent transaction verification and have a proven track record of compensating users without draining reserves.
Future Outlook - Regulation and Industry Shifts
Regulators in the U.S. and Europe are tightening crypto‑custody rules, pushing for stricter audit trails, third‑party verification, and mandatory insurance coverage for custodial platforms. The Bybit incident is frequently cited in legislative hearings as a case study for why “institutional‑grade” security frameworks are essential.
Meanwhile, the rise of self‑custody tools (e.g., hardware wallets, decentralized custody protocols) is accelerating. However, experts warn that moving the burden of security to individual users demands a higher level of technical competence.
Frequently Asked Questions
Did Bybit really lose $1.5billion in Ether?
Yes. On February 21, 2025, the Lazarus Group stole approximately $1.5billion worth of Ether from Bybit’s hot‑wallets, marking the largest crypto heist ever recorded.
How did Bybit compensate affected users?
Bybit pledged to cover the full loss from its own capital reserves and processed withdrawals within days, allowing users to retrieve their remaining balances without extra fees.
What security measures does Bybit offer now?
Current defenses include offline cold‑wallet storage, multi‑signature and Threshold Signature Scheme for withdrawals, mandatory two‑factor or hardware authentication, end‑to‑end encrypted data, and real‑time behavioral monitoring.
Is it safer to use a self‑custody wallet instead of Bybit?
Self‑custody removes the exchange as a third‑party risk, but it places full responsibility on you. You must manage private keys, backups, and device security without the safety net a reputable exchange can provide.
Will new regulations make exchanges like Bybit more secure?
Upcoming regulations in the U.S. and EU are likely to require stricter audit trails, third‑party verification, and minimum insurance coverage, which should raise the baseline security for custodial platforms.
