Crypto Exchange Risk Calculator
Assess Your Exchange Risk
Based on the Bybit hack and industry insights, this tool helps you understand your risk exposure when holding crypto on exchanges. Follow the article's recommendations to make safer decisions.
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Recommendations
Keep your assets in a hardware wallet for long-term storage. Use exchange wallets only for active trading.
Key Insights
Based on the Bybit hack and industry best practices:
- Exchanges are vulnerable to human error and supply chain attacks
- $10,000 is a recommended threshold for considering self-custody
- Never store long-term holdings on any exchange
- Hardware wallets provide the highest security for large holdings
When you hear the name Bybit, most people think of fast trades, high leverage, and deep liquidity. But in February 2025, that reputation took a brutal hit. Bybit became the target of the largest crypto heist in history-nearly $1.5 billion in Ether stolen by North Korea’s Lazarus Group. That’s not a rumor. It’s a fact. And what happened after that breach tells you more about Bybit than any marketing page ever could.
What Happened During the Bybit Hack?
On February 21, 2025, hackers slipped past Bybit’s defenses and drained over $1.5 billion in ETH from its hot wallets. This wasn’t a brute-force attack. It was surgical. The attackers used social engineering to trick internal staff into approving fraudulent transactions. They compromised software supply chains, injected malware into update pipelines, and exploited weak verification steps in the approval workflow. Even though Bybit used multi-signature wallets and cold storage for most assets, the hackers didn’t need to break into those. They just needed one person to click "approve" on a fake transaction. Chainalysis confirmed that state-sponsored hackers from North Korea were behind it. In 2024 alone, DPRK-linked groups stole $1.34 billion across 47 crypto incidents. The Bybit hack alone made up more than the entire year’s total. That’s how big this was.How Did Bybit Respond?
Most exchanges would’ve frozen withdrawals, gone silent, or collapsed under the pressure. Bybit didn’t. Within hours, they announced they would cover all losses from their own funds. No delays. No excuses. They paid out every single withdrawal request-over $1.5 billion in total. That’s not just good PR. That’s a massive financial commitment. Only an exchange with deep reserves and strong leadership could pull that off. They also launched a bounty program offering 10% of any recovered funds to ethical hackers and other exchanges. So far, only $43 million has been returned. The rest? Still out there. The Ethereum blockchain couldn’t be rolled back. Developers said it was technically impossible. That’s the reality of crypto: once a transaction is on-chain, it’s permanent.Bybit’s Security Setup Before the Hack
Before the breach, Bybit had one of the most advanced security architectures in the industry. They stored 95% of user funds in cold wallets-offline, air-gapped, and protected by hardware security modules. The remaining 5% in hot wallets for trading were guarded by:- Multi-signature wallets requiring 3 out of 5 keys to approve transfers
- Threshold Signature Schemes (TSS) to eliminate single points of failure
- Trusted Execution Environments (TEE) to isolate sensitive operations
- End-to-end encryption for all user data
- Real-time behavior monitoring that flags unusual login patterns or withdrawal attempts
- Two-factor authentication (2FA) and hardware key support
The Real Problem: Human Error and Supply Chain Gaps
Security experts agree: the hack exposed flaws in operational security, not crypto security. The attackers didn’t crack encryption. They didn’t brute-force keys. They tricked people. Specific weaknesses included:- No independent verification for transaction approvals-only one person reviewed each request
- Missing cryptographic code signing for software updates, allowing malware to sneak into the UI
- Weak controls on AWS access keys-attackers gained access to cloud infrastructure through a compromised developer account
- No mandatory multi-party review for wallet permission changes
Is Bybit Safe to Use Today?
As of October 2025, Bybit is still operating. It’s still one of the top 3 exchanges by volume. Trading is smooth. Fees are competitive. The app works. But safety? That’s different. They’ve made changes since the hack:- Added mandatory dual approval for all withdrawal requests
- Deployed Subresource Integrity (SRI) to detect front-end tampering
- Implemented Cloud Security Posture Management (CSPM) to monitor cloud access keys in real time
- Required code reviews by at least two engineers before any wallet-related update
- Started publishing monthly security audits
Self-Custody: The Real Alternative
After the hack, many users asked: “Should I move my crypto to a hardware wallet?” The answer? Maybe. If you hold large amounts-$10,000 or more-self-custody is worth considering. Tools like Ledger, Trezor, or even a simple paper wallet give you full control. No exchange can freeze your funds. No hacker can drain your wallet unless they steal your seed phrase. But here’s the catch: self-custody puts all the responsibility on you. Lose your seed phrase? Gone forever. Fall for a phishing scam? Gone forever. Forget to update your firmware? Vulnerable to new exploits. Most people aren’t ready for that. And that’s okay. But if you’re using Bybit or any centralized exchange, assume your assets are at risk. Treat your exchange account like a checking account-not a savings account.What Does This Mean for the Crypto Industry?
The Bybit hack didn’t just hurt one company. It shook the entire crypto ecosystem. It proved that even the most advanced platforms can be taken down by simple human error. Regulators are now pushing for mandatory enterprise security standards for exchanges. Some U.S. lawmakers are calling for insurance requirements and third-party audits. Meanwhile, institutions are starting to adopt decentralized custody solutions-like multi-sig wallets managed by legal entities or institutional key management platforms from firms like Fireblocks and Quant Network. These systems require multiple approvals, geographically distributed signers, and audit trails. They’re expensive. But for large holders, they’re the only way forward.Final Verdict: Should You Use Bybit?
If you’re a casual trader who moves small amounts, uses stop-losses, and doesn’t hold long-term positions-Bybit is still a solid choice. The platform is fast, reliable, and has low fees. The UI is clean. The charting tools are powerful. But if you’re holding significant value-especially ETH or BTC-you need to ask yourself: Do I trust an exchange to protect my life savings? After $1.5 billion vanished in one day, the answer should be no. Use Bybit for trading. Not for storing. Keep your long-term holdings in cold storage. Use exchange wallets like you’d use a debit card-not a vault. Bybit survived the biggest heist in crypto history. That’s impressive. But survival doesn’t mean safety. It means they had the money to pay back the losses. That’s not a security feature. That’s a financial backup plan. The real lesson? In crypto, the only truly secure wallet is the one you control.Was Bybit hacked in 2025?
Yes. On February 21, 2025, Bybit suffered a $1.5 billion hack attributed to North Korea’s Lazarus Group. Attackers used social engineering to bypass internal approval systems and steal ETH from hot wallets. Despite the breach, Bybit compensated all affected users from company funds.
Is Bybit safe to use in 2025?
Bybit is still operational and has improved its security since the 2025 hack. They now require dual approvals for withdrawals, monitor cloud access keys, and enforce code reviews. However, no centralized exchange is immune to human error or supply chain attacks. Use Bybit for trading, not long-term storage.
How did the hackers steal $1.5 billion from Bybit?
The hackers compromised Bybit’s software supply chain, injected malware into update files, and tricked employees into approving fraudulent transactions. They exploited weak internal verification processes-not encryption flaws. This shows that even advanced security tools can fail if human workflows aren’t hardened.
Did Bybit lose money from the hack?
No. Bybit covered the $1.5 billion loss from its own reserves. This demonstrated strong financial health and crisis management. Users received full compensation, and withdrawals were processed without delay.
Should I move my crypto from Bybit to a hardware wallet?
If you hold more than $10,000 in crypto long-term, yes. Hardware wallets like Ledger or Trezor give you full control. Exchanges can be hacked, frozen, or shut down. Self-custody shifts risk to you-but it also removes the risk of exchange failure. Use exchanges for trading only.
What’s the biggest risk when using Bybit?
The biggest risk is trusting a centralized platform with your assets. Even with top-tier security, human error, insider threats, and supply chain attacks can bypass all technical defenses. Never store large amounts on any exchange-regardless of its reputation.
Are there better alternatives to Bybit?
For trading, Binance, Kraken, and Coinbase offer similar features with stronger regulatory compliance. For custody, no exchange is safer than self-storage. If you want institutional-grade security, consider platforms like Fireblocks or Coinbase Custody, which use multi-sig and hardware security modules for enterprise clients.
Chris Houser
October 29, 2025 AT 08:10Look, I’ve been in crypto since 2017, and I’ve seen exchanges rise and fall. Bybit didn’t get hacked because their tech was weak-it got hacked because people got tricked. That’s the real story. No amount of multi-sig or TSS fixes a tired dev who just wants to go home at 5 PM. The fix isn’t more encryption-it’s better processes. Mandatory dual approvals? That’s not fancy. That’s basic. And honestly? It should’ve been there from day one.
Don’t blame the blockchain. Blame the human workflow.
Still using Bybit? Fine. Just don’t sleep on your seed phrase.
Trade smart. Don’t trust blindly.
William Burns
October 30, 2025 AT 08:35One must question the epistemological foundations of decentralized finance when even the most ostensibly robust institutional infrastructures are susceptible to social engineering. The very premise of centralized custody is ontologically flawed-a digital paradox wherein the architecture of security is predicated upon the fallibility of human cognition. One cannot, in good conscience, advocate for the continued use of such platforms when the ontological vulnerability of the human agent remains unmitigated. One might as well entrust one’s life savings to a child with a keychain.
It is not a hack. It is an inevitability.
Ashley Cecil
October 31, 2025 AT 03:35It is deeply concerning that so many commenters are treating this incident as if it were a mere operational hiccup. The fact remains: Bybit failed to implement basic corporate governance protocols. No independent verification? No code-signing? No mandatory dual approvals? These are not oversights-they are negligence. And now, because the company had sufficient capital to cover losses, the public is being led to believe that this was somehow a ‘win.’
It was not. It was a near-collapse averted by financial muscle, not by competence. The regulatory bodies should be taking notes.