Bybit Hack: Stolen Funds Expected to Flow Through Crypto Mixers, Says Elliptic

The Bybit crypto exchange hack, of $1.4 billion, has caused a lot of panic in the broader industry revolving around the theft. A key concern is how these resources would be laundered. A report from Elliptic, a well-known blockchain security agency, said that it was the Lazarus Group from North Korea and it is projected that they will make use of crypto mixers to hide their financial dealings. But seeing how colossal the theft was, it is highly likely that they will have difficulties laundering the money.

Hackers May Use Crypto Mixers to Launder Funds

The staggering $1.4 billion hack of the Bybit crypto exchange has set off alarms across the blockchain industry, with experts predicting that the stolen funds could soon be funneled through cryptocurrency mixers. According to blockchain security firm Elliptic, the hackers, identified as North Korea’s Lazarus Group, may attempt to obscure their tracks by leveraging these tools.

“If previous laundering patterns are followed, we might expect to see the use of mixers next,” Elliptic stated in a report. However, the firm also noted that the scale of the theft could pose challenges for effective laundering. The Bybit attack, which took place on Feb. 21, marks the largest crypto heist in history, surpassing major breaches like the Poly Network hack in 2021 and the Ronin Network hack in 2022.

Lazarus Group typically follows a structured laundering process, Elliptic explained. The initial step involves swapping stolen tokens for blockchain-native assets like Ethereum (ETH). The group has now moved into the second phase, known as “layering,” which involves dispersing funds across multiple wallets, bridging assets across different blockchains, and utilizing decentralized exchanges to further complicate tracking.

Stolen Assets Being Systematically Moved

The funds were moved into 50 wallets, each containing about 10,000 ETH, within 2 hours of the attack. Although there are still some funds left in the wallets, Elliptic claims that more than 10% of the funds have been transferred and the wallets are now being systematically emptied. 

Bybit and Elliptic have attempted to block any alterations to any accounts that are linked with the stolen funds, however, eXch has also been flagged for aiding the laundering process. Elliptic states that eXch continues to allow movements with the stolen funds, while eXch claims to not have any association with the stolen assets or North Korean investigators.

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ZachXBT, a blockchain analyst, reported that the Lazarus Group successfully utilized mixers and P2P marketplaces to launder over $200 million in stolen cryptocurrency. Although these criminals were known to use mixers, Chainalysis reports that the groups are now switching to crosschain bridges due to their ease of use.

Ben Zhou, CEO of Bybit, claims that the exchange has once again reached the financial cap that they were at prior to the hack in order to attain ether at $1.4 billion. We also look forward to releasing another proof of reserve audit, said Zhou, which would further showcase Bybit’s financial activity.