Crypto Quill

Bybit has officially restored its Ethereum reserves after suffering a massive $1.5 billion loss in one of the largest crypto heists in history. CEO Ben Zhou confirmed that the exchange has made up for the entire shortfall, reassuring users and the broader crypto community that all client assets remain backed 1:1.

Bybit Restores ETH Reserves, New Proof of Reserves Report Coming

Ben Zhou took to social media platform X (formerly Twitter) to make the announcement, stating:

“Bybit has fully reimbursed the ETH shortfall, and a new Proof of Reserves (POR) report will be released soon. Stay tuned.”

This update comes after intense scrutiny and concerns from users following the security breach. Transparency remains a critical issue in the crypto space, and Bybit’s move to promptly address the issue stands in stark contrast to past failures by other major exchanges.

Zhou’s promise of a soon-to-be-released POR report adds an additional layer of credibility. The report, expected to utilize a Merkle tree verification system, will provide concrete evidence that Bybit’s client assets remain fully backed and available for withdrawals.

Industry Applauds Bybit’s Swift Response

The crypto community has largely praised Bybit’s ability to cover the shortfall without prolonged delays. Jeff Park, Head of Strategies at Bitwise Investments, highlighted the stark contrast between Bybit’s handling of the crisis and FTX’s infamous collapse.

“Bybit succeeded where FTX failed,” Park noted, emphasizing that decentralized transparency and proper fund management are key differentiators.

The comparison is hard to ignore. While FTX’s downfall was marked by missing user funds, lack of accountability, and legal battles, Bybit took immediate steps to address its financial setback. The quick recovery is being seen as a testament to the exchange’s liquidity strength and commitment to user protection.

Where Did the Recovered ETH Come From?

On-chain data reveals that Bybit secured more than 400,000 ETH through a mix of over-the-counter (OTC) purchases and loans. Web3 analytics firm Lookonchain provided details of these transactions:

• 266,694 ETH (valued at $742M) was acquired following the hack.
• 157,660 ETH ($437.82M) came from OTC deals involving major firms like Galaxy Digital, FalconX, and Wintermute.
• 109,033 ETH ($304.12M) was sourced from a mix of decentralized and centralized exchanges.

This aggressive approach to replenishing reserves signals that Bybit had immediate access to liquidity partners willing to facilitate large-scale ETH acquisitions.

The Road Ahead for Bybit

Bybit’s ability to cover such a massive loss without disrupting daily operations or triggering mass withdrawals is a rare occurrence in the crypto space. However, questions remain about security enhancements moving forward.

One major area of focus will be:

• Strengthening security protocols – Users will want reassurances that similar breaches won’t happen again.
• Regaining user trust – While Bybit acted swiftly, the hack itself was a major blow to its reputation.
• Regulatory implications – As scrutiny of centralized exchanges increases, Bybit’s handling of the situation may influence future regulations.

With the upcoming Proof of Reserves report, Bybit aims to demonstrate financial resilience and transparency. How the market reacts in the coming weeks will determine whether this recovery is enough to keep user confidence intact.