Changpeng Zhao Warns of Security Flaws After $1.4B Bybit Hack

Highlights:

• CZ warns of rising crypto hacks, citing Bybit’s $1.4 billion breach.
• He highlights the importance of pausing withdrawals after the hack.
• Zhao praised Bybit’s CEO for keeping transparency during the recent crisis.

Changpeng Zhao (CZ), co-founder and former CEO of Binance, has warned about emerging hacking tactics. In an X post, CZ highlighted how hackers breached exchanges like WazirX, Phemex, and Bybit, stealing significant amounts of crypto from their multi-signature cold wallets. Notably, the latest Bybit hack resulted in a loss of $1.4 billion. This has raised serious concerns about the safety of users’ funds.

In Bybit’s case, CZ explained that attackers altered the front-end interface to make a transaction appear legitimate. However, a different transaction was being authorized in the background. This exposed weaknesses in multi-signature security systems. Multiple blockchain security analysts like Arkham Intelligence and on-chain sleuth ZachXBT have tied the Bybit attack to the North Korean hacker organization Lazarus Group.

Even more alarming is that these breached exchanges relied on different security providers. This indicates that hackers, possibly the infamous Lazarus Group, have discovered vulnerabilities extending beyond just one system. Whether they target vulnerabilities in security devices, servers, or both remains uncertain.

He wrote:

“What’s more scary is that the affected exchanges used different multi-sig solution providers. The hackers, the Lazarus Group, are highly advanced and broad in their abilities to penetrate.”

Zhao Stresses Pausing Withdrawals to Prevent Losses and Ensure Security

CZ emphasized the importance of pausing withdrawals immediately after detecting a hack to prevent further losses and allow time for a full investigation. By stopping withdrawals, exchanges can determine how the attack happened, identify affected systems, and ensure security is fully restored before resuming operations.

He referenced Binance’s 2019 hack, where the exchange lost $40 million and had to suspend withdrawals for a week. While this initially caused panic, the thorough security review reassured users. When withdrawals resumed, deposits exceeded withdrawals, showing restored trust. Overall, CZ urged exchanges not to take security lightly and to consider the security measures he had shared in the past.

Some thoughts on the recent hack(s).

There is a pattern where hackers were able to steal large amounts of crypto from multi-sig “cold storage” solutions, as with ByBit, Phemex, WazirX and potentially others. In the most recent ByBit case, the hackers were able to make the…

— CZ 🔶 BNB (@cz_binance) February 22, 2025

CZ Praises Bybit’s Crisis Management

Meanwhile, CZ praised Bybit’s CEO, Ben Zhou, for staying calm and maintaining transparency during the crisis. He said Zhou’s open communication and effective handling of the situation had a positive impact.

CZ compared this to other exchanges like FTX and WazirX, where a lack of transparency during crises led to greater problems. In those cases, unclear statements and poor communication created uncertainty and panic among users, worsening the situation.

He emphasized that users lose trust when an exchange fails to communicate openly during a crisis, leading to mass withdrawals that can escalate the problem. In contrast, Bybit’s management ensured that there was free and easy flow of information to and from the investors and users to avoid panic. CZ highlighted security as one of the most important issues in the crypto industry. He advised the exchanges and the users to be very watchful and to get their information from the right sources. He recommended opting for sites with tight security to avoid breaches of trust.