On Friday evening, the Bybit cryptocurrency platform was subjected to the largest hack in the history of the cryptocurrency market. How did it happen? And how much was the market affected by the news? I will answer all of this and more in this article.

How was Bybit hacked?

At 5:16 PM Mecca time, the Bybit team was making traditional transfers between its cold and hot wallets.
One of these cold wallets was the Multi-Sig wallet, which is a type of wallet that is essentially a smart contract controlled by a number of wallets, and in order for any transfer to be completed, these wallets need to agree on the signature.

From here, events begin to develop, especially since the platform has not yet issued its investigative report, but the official story from the platform, according to Ben Zhou, is that the hacker was able to exploit a certain loophole in one of these transactions, which led to the appearance of data showing that the transaction was valid, but in reality the transaction would have made the platform transfer the amount directly to the hacker’s wallet.

The vulnerability could have been discovered during the different signatures, since the signature on the transaction passes through more than one person, the last of whom was Ben, the founder and CEO of the platform, but he could not discover this vulnerability, and his signature on the transaction was the last signature that transferred the amount directly to the hacker's wallet.

So far, numbers and blockchain analysis show that the hack only affected Ethereum coins that were in Bybit cold wallets.

Bybit Hack Impact on Market

Of course, a hack of this magnitude caused panic in the market, which led to a huge number of withdrawal requests. According to a tweet posted by Ben on his official Twitter account, the number of withdrawal requests from the platform reached 350,000 requests, which is the highest pressure the platform has faced since its inception.

Therefore, Ben stated that the platform is facing a liquidity deficit problem, and to compensate for this deficit, the platform will need to request temporary loans from major institutions in the market.

Binance, represented by CZ and Yi He (the founders of the platform) were among the first to support Ben after he confirmed that the Bybit platform had been hacked. CZ commented to him that the Binance team would be available to provide support in any case.

How does Binance protect users from hacking and theft?

Binance is considered one of the most secure platforms in the cryptocurrency market. Not only because its team includes the best experts in the cybersecurity sector, but also because of the security strategies that the platform has been in place for years.

In 2018, Binance decided to allocate a portion of its profits from trading fees and pool it into a reserve fund.
The purpose of this fund is to be available to compensate for any losses resulting from hacking or theft that the platform may be exposed to at any time.

The fund is known as the SAFU Fund, and currently holds $1 billion worth of the stablecoin USDC.

In addition to this fund, which plays a fundamental role in securing users’ assets against any hacking, the Binance platform maintains additional reserves on users’ assets, and all of this data is available in the Proof of Reserves reports issued by the platform periodically.