On February 21, 2025, the Bybit exchange experienced the largest hacker attack in cryptocurrency history, with over $1.46 billion stolen, accounting for 16% of the total historical cryptocurrency theft. The incident triggered a massive market shock: Bitcoin plummeted to $94,800 within 24 hours, Ethereum dropped 5%, and over 170,000 people were liquidated, resulting in losses of $572 million. Despite Bybit's promise to safeguard user assets with a reserve of $20 billion, panic spread throughout the industry, plunging the market into a state of 'extreme fear.' This incident not only exposed security vulnerabilities at exchanges but could also accelerate the implementation of global regulatory frameworks, such as the U.S. SEC's crypto task force and South Korea's Virtual Asset User Protection Law.

The Myth of Security Shattered: Human Nature is the Biggest Vulnerability

This attack upended traditional understanding — hackers did not crack the multi-signature mechanism but instead forged the Safe wallet user interface (UI), using 'blind signing' techniques to induce the signer to approve malicious transactions. The attackers had long-term APT infiltration, altered smart contract logic, and precisely manipulated human weaknesses, exemplifying a 'textbook case' of social engineering attacks. This reveals that cold wallets and multi-signature mechanisms are not absolutely secure, and human operations and supply chain vulnerabilities could become fatal shortcomings.

Three Major Warnings for Retail Investors

1. Security First: Hardware wallets should be paired with screen verification features to avoid signing transactions that are not fully understood; be wary of the risk of 'legitimate UI' being maliciously tampered with.

2. Choose Compliant Platforms: Prioritize exchanges with transparent reserves (such as Bybit's 1:1 asset proof) and high cold wallet isolation (such as South Korea's requirement of 80% of assets stored in cold wallets).

3. Risk Hedging: The cryptocurrency market is highly volatile, requiring control of leverage usage, diversifying assets across multiple wallets or protocols, and avoiding single risk exposure.

Industry Future Outlook: A Coexistence of Crisis and Opportunity

In the short term, the incident may slow down the bull market, but in the long term, it could drive industry upgrades:

- Innovations in Security Technology: Multi-level signature verification and cross-chain transaction protection (such as EIP-155) may become new standards;

- Accelerated Regulatory Implementation: Global cooperation to trace hackers (such as North Korea's Lazarus Group), mandatory insurance, and reserve systems may become the norm;

- Rebuilding Trust: If Bybit successfully compensates and publicly discloses the details of the vulnerabilities, it could set a benchmark for crisis management in the industry; otherwise, a collapse similar to FTX may recur.

Conclusion

The Bybit incident serves as a 'stress test' in cryptocurrency history, sounding the alarm on security while providing an opportunity for industry evolution. Investors need to adopt a more cautious approach to market participation, and the true maturity of the industry may begin with this painful lesson of $1.5 billion.