Bybit CEO warns of stablecoin liquidity crisis in the next 5 hours due to frozen Ethereum multisig wallet

In a discussion on X Space, the Bybit CEO revealed that they are facing an impending stablecoin liquidity crisis due to the temporary disabling of some functions in Ethereum's Safe multisig wallet. This move was made following the $1.4 billion hack of Bybit on February 21.

Concerning issues:

- Bybit cannot move stablecoins due to the frozen Safe wallet.

- Bybit's USDT reserves could be depleted within 5 to 6 hours.

- A $3 billion liquidity shortfall could occur if no alternative solution is found.

- Even when Safe resumes transactions, Bybit's CEO is still hesitant to move funds after losing $1.4 billion using the same system.

Impact on the market:

- The stablecoin shortage on Bybit could make it difficult for users to withdraw or trade USDT, affecting the overall liquidity of the market.

- Price volatility may increase, leading to wider price spreads, slippage, or even the risk of USDT and other stablecoins losing their peg.

- Arbitrage opportunities may arise as traders exploit price discrepancies between exchanges, potentially creating instability in the market.

- The liquidity issue on Bybit could impact other platforms, disrupting stablecoin liquidity pools and market-making activities. $ETH