If someone steals your funds, that is unbearable. What if the stolen funds are hard to trace? ByBit, one of the prominent crypto exchanges in the world, experienced a hack, causing a $1.4 billion fund loss on February 21, 2025. However, three months after the hack, the crypto exchange could not yet find an answer to where and how half of the hacked funds were stolen. Around $644 million in stolen funds is untraceable!

An untraceable fund loss: How did the ByBit heist happen?      

Hackers stole over $1.4 billion worth of Ethereum (ETH) from a ByBit cold wallet during a transfer from the cold wallet to a warm wallet. The hackers exploited a free storage software tool used by ByBit to transfer ETH, and used phishing emails to trick ByBit users.

And now, ByBit data revealed that the stolen funds have vanished from public tracking after being funneled through mixing services like Wasabi. However, the ByBit team has frozen $63 million fund, which is 4.5% of the total fund. 

North Korean state-backed actors Lazarus Group, are assumed to be the suspected hackers who have performed the same activity in previous hacks. The hackers have made fund recovery challenging for ByBit by laundering the money through numerous blockchain transactions. 

Earlier in April, the CEO of ByBit, Ben Zhou, announced on X that over $380 million in hacked funds were untraceable.  

A solution to block a hack?

LayerZero, an omnichain messaging protocol, has recently come up with a solution — OneSig — in light of recent hacks, including the ByBit hack. 

OneSig executes “any number of transactions across any number of blockchains with a single signature.” This framework, according to the protocol developers, helps crypto developers reduce their dependence on any third-party services. Third parties are potentially exposed to bugs, poor security, or weak code. Several crypto exchanges use third-party services to build a project faster, receive niche services, or save costs.