Bitcoin Takes a Hit as ByBit Wallet Hack Exposes Major Security Flaws

On Friday, the cryptocurrency market experienced a significant setback, with Bitcoin $103,574 losing nearly $14,000 following the hack of a ByBit wallet. This incident, compounded by several negative developments, triggered a broader market collapse, leading to considerable losses among altcoins. Binance founder CZ publicly mocked the recent updates shared by Safe, highlighting concerns over security.

Impact on SAFE Coin

SAFE Coin, which has witnessed nearly a 46% drop over the past month, saw its losses extend further with today’s developments. Despite its name implying safety and security, reports surfaced indicating breaches in its infrastructure, which led to the hack of the ByBit cold wallet. CZ openly criticized this situation, expressing his disbelief at the assurances given by Safe.

Following the FTX collapse, interest in decentralized wallets that offer self-custody services surged. Users withdrew their assets from exchanges to secure them in their own wallets. However, the revelation that one of the most popular wallets, Safe, was not as “SAFE” as advertised raised many questions. CZ shared his skepticism about the updates provided by Safe.

“I generally try not to criticize other players in the industry, but occasionally I do.”

“Safe’s update isn’t very reassuring. It uses vague language to sidestep issues. After reading it, I have more questions than answers.”

“What does it mean to compromise the ‘developer machine’ of Safe? How was this specific machine hacked? Was it social engineering, a virus, etc.?”

“How did a developer machine gain access to an account operated by Bybit? Were any codes directly deployed from this developer machine to production?”

“How did they deceive the Ledger verification step among multiple signers? Was it blind signing or did the signers fail to verify correctly?”

“Was the largest address managed by Safe worth $1.4 billion? How did they manage to avoid targeting others?”

“What lessons can other ‘self-custody, multi-sig’ wallet providers and users learn from this?”