Hackers stole an estimated $1.5 billion from Dubai-based Bybit, gaining control of an Ethereum wallet and funneling its assets to an unknown address. With this breach already being labeled the largest in crypto history, experts are alerting to the mounting risks. How can you best protect your digital assets in these uncertain times?
Protect your Ethereum assets using multifactor authentication and encryption
Ethereum stands apart from traditional cryptocurrencies. Unlike Bitcoin, which is primarily a digital store of value, Ethereum enables users to create everything from financial tools to NFT marketplaces—all without relying on traditional banks or institutions. With strong community backing, Ethereum is widely used by developers and investors for transactions, staking and liquidity. Yet, its decentralized structure also presents inherent security concerns.
Since cryptocurrency first gained notoriety in 2009, the crypto space has endured a significant number of hacks and fraud cases. In 2024 alone, thefts totaled over $2 billion. For the fourth year in a row, billion-dollar losses have been reported, impacting major targets such as Poly Network, Coincheck and Mt. Gox. In response, Bybit and other exchanges are continuously enhancing their safeguards to fend off hackers.
“Cryptocurrency exchanges implement a variety of security measures to protect against hacks and ensure the safety of users’ funds,” according to Charlotte Hill, deputy chair of the Cyber Insurance Association and was previously named Citywealth’s Woman of the Year in Financial Tech and Crypto Innovation in the U.K. “Some of the key security measures include multifactor authentication, cold storage (where a significant portion of users’ funds is kept offline in cold wallets, which are not connected to the internet and are therefore less vulnerable to hacking attempts), multisignature wallets, regular security audits and encryption tools,” she says.
Storing funds in your cold wallet ensures better protection
Storing funds in cold storage offers better protection by keeping them offline. Hot storage, which is more accessible for quick trading, is much more vulnerable to cyberattacks. Because cold storage wallets aren’t connected to the internet, they’re not directly accessible to hackers, making them a safer option for securing funds. In this latest case, the cybercriminal took unauthorized control of a Bybit cold wallet and then transferred funds into a warm wallet.
Though not always foolproof, protections like these help services like Bybit keep funds as secure as possible. Hill suggests that these measures should be accompanied by “regular staff training to create a constant awareness of the potential threats to exchanges and other custodians,” as large-scale attacks can erode trust in these systems.
There’s no official protection for your crypto value
Cryptocurrencies remain largely unregulated, and the value stored in them lacks official protection. The ethical standards and practices governing how exchanges like Bybit handle and protect client funds also still remain unclear. As stated in Bybit’s own Risk Disclosure Statement, some digital asset transactions may be irreversible, and losses resulting from “fraudulent or accidental transactions may not be recoverable.” Deposits into accounts are also not considered deposits under applicable laws, making them subject to different legal protections.
“Crypto hacks are becoming more sophisticated, exploiting vulnerabilities in exchanges, wallets and even human behavior through social engineering tactics,” according to Ahmad Maaitah, a lecturer in finance and fintech at University of Southampton, whose research includes a focus on Bitcoin market networks and cyberattacks.
“One of the biggest risks comes from social engineering attacks, where hackers manipulate users or employees into revealing sensitive information,” he says. To safeguard their assets, crypto users should always consider the most fundamental precautions like diversifying wallets, keeping long-term savings in cold storage and looking into insurance coverage. Maaitah advises caution when using exchanges, noting, “For those who must use exchanges, choosing a reputable, well-regulated platform with strong security practices is vital.” He observes that hacking tactics are evolving swiftly, and with crypto’s growth, cybercriminals are targeting larger rewards.
Maaitah also recommends noncustodial wallets, where users have control over the private keys to their funds. “The common saying in crypto ‘not your keys, not your coins’ is a reminder that if someone else holds the private keys, they ultimately control the funds. By managing their own wallets, users eliminate the risk of losing assets due to an exchange breach,” he advises.
The crypto market may face larger hacks soon
Every user must stay vigilant in protecting themselves and their funds. According to Maaitah, the Bybit breach is a clear indication of looming risks. “We could be looking at even larger-scale breaches in the near future. The industry needs to act now to stay ahead of these threats, or the consequences could be catastrophic,” he warns.
Pew Research Center reported that 63% of Americans are already wary of crypto’s safety and reliability, as ongoing lawsuits and potential congressional oversight mar the space’s reputation.
Despite the obvious allure of crypto, the lack of regulation and protection is a glaring red flag. The recent hack on Bybit has shaken trust, leaving many wondering if crypto exchanges can ever provide true security. With regard to this particular incident, in a rapid response to the Ethereum theft, Bybit’s CEO confirmed on Tuesday that the exchange has now fully compensated the victims. After announcing they were enlisting top external experts to aid in recovery, Bybit managed to recover hundreds of thousands of tokens in under 72 hours, leveraging a combination of emergency loans and large deposits to restore the stolen funds.
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