Ben Zhou CEO at Bybit has confirmed the restoration of Ethereum reserves (ETH) following the recent security breach that cost $1.4 Billion.
Zhou posted on X announcing that Bybit is soon to release an updated report demonstrating its client asset holdings at 1:1.
The statement was made by:
“Bybit has already fully closed the ETH gap, new audited POR report will be published very soon to show that Bybit is again Back to 100% 1:1 on client assets through merkle tree.”
Zhou’s statement confirmed a report from blockchain analytics firm Lookonchain. Bybit’s reserve was replenished by the firm through OTC (over-the-counter) purchases, whale deposits and loans, from Binance, Bitget and HTX, among other major cryptoplatforms.
Lookonchain, the stricken exchange, said it purchased 157.660 ETH for approximately $437.8 Million from FalconX Wintermute and other investment firms via OTC.
Also, the exchange acquired another 304 million dollars in ETH through centralized as well as decentralized exchanges.
Recovery efforts for funds
While the exchange might have closed its platform’s ETH gap, it has stepped up its recovery efforts by initiating a 10% bounty program and freezing some stolen funds.
The crypto trading platform announced a program on February 22 that encourages ethical hackers and cyber security experts to help in the recovery.
If the entire amount of money can be recovered, the exchange will offer a potential reward of $140,000,000.
Zhou, said
“Bybit launched a bounty program on February 22, encouraging ethical hackers and cybersecurity experts to assist in the recovery process. The exchange has pledged a reward of up to 10% of the recovered funds, potentially offering as much as $140 million if the full amount is reclaimed.”
Bybit also works with other crypto platforms in order to recover and freeze stolen assets.
The exchange has frozen $43 Million through partnership with Tether, ThorChain Bitget ChangeNow Fixed Float Avalanche Circle CoinEx.
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“Through swift action and effective coordination, the mETH Protocol team successfully recovered 15,000 cmETH tokens worth approximately $43 million”
Techniques of laundering
But despite the recovery efforts made by the thieves, they have started to launder their stolen money.
Elliptic, a blockchain forensics company, noted that these laundering techniques are similar to those used by Lazarus Group – a well-known cybercrime organization.
According to the company, hackers instantly converted stolen tokens in ETH using decentralized exchanges. This was done to avoid freezing assets. The move allowed the hackers to bypass any restrictions that token issuers may have imposed on certain tokens.
After the two-hour attack, there were 50 wallets with each one holding around 10,000 ETH. The wallets have been emptied and at least 10% are already moving.
Elliptic added that attackers had also begun converting ETH to Bitcoin by using different trading services.
Tornado Cash is a mixer that attackers may use to hide their actions if they continue with past patterns of laundering. The sheer volume of stolen property may complicate the process.
Meanwhile, on-chain investigator ZachXBT also discovered that the attackers attempted to launder funds using memecoins on Solana’s Pump.Fun platform.
Blockchain sleuths noted that a wallet exploited transferred 60 SOL from one address to another to create QinShihuang token, with a trading volume of over $26 Million.
Pump.Fun and the Solana Foundation responded to the attack by blocking the token and removing it, thus preventing further cashouts. Bybit praised the quick action and highlighted the importance community-driven crypto security measures.
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