In a major development, crypto exchange Bybit exchange appears to have fallen victim to a significant hack today. A staggering sum of approximately $1.4 billion in ether (ETH) and staked ether (stETH) is reported to have been illicitly transferred out of Bybit’s wallets.

The alarm bells were first sounded by vigilant blockchain analysts, including ZachXBT, who flagged the unusual outflows in his Telegram group. He posted an alert to his followers, stating that his “sources confirm it’s a security incident,” indicating a serious breach.

Adding to the gravity of the situation, Ben Zhou, Bybit’s founder and CEO himself, has taken to X to confirm the hack. He detailed that the attackers “took control of the specific ETH cold wallet” used by Bybit exchange for secure storage, and proceeded to “trasfer [sic] all ETH in the cold wallet.”

While the news is undoubtedly concerning, Zhou sought to reassure users, emphasizing “that all other cold wallets are secure.” He also mentioned that, outside of this incident, withdrawals are functioning normally.

This incident raises serious questions about Bybit’s much-publicized “Triple Layer Asset Protection.” The exchange boasts about storing “user funds securely offline in cold wallets” and utilizing “a combination of advanced multi-signature, Trusted Execution Environment (TEE) and Threshold Signature Schemes” to “protect them from unauthorized online access.” The hack suggests a failure in these security measures, at least in this instance.

Interestingly, Bybit’s proof of reserves, just yesterday, indicated a holding of 543,453 ETH against 537,152 ETH owed to users – presenting a seemingly healthy excess of 6,301 ETH.

However, the scale of this attack is far more severe. A reported 401,346 ETH has been drained, significantly exceeding Bybit’s reported excess holdings.

Protos has reached out to Bybit exchange to request an official comment on this developing situation. As of writing, we have not yet received a response.