The Bybit Hack Made Kim Jong Un Crypto’s Most Influential in 2025

Cryptocurrency trade Bybit suffered a $1.4 billion hack in February 2025 that uncovered structural weaknesses in custody methods lengthy thought of {industry} requirements, corresponding to chilly storage and multisignature wallets.

On the time, the exploit was the biggest identified hack in crypto historical past, although that distinction was later eclipsed by findings that Chinese language mining pool LuBian misplaced $3.5 billion in 2020.

“The [Bybit] hack confirmed that chilly storage and multisig labels are meaningless if the approval movement, transaction visibility, or signer atmosphere will be manipulated,” stated Ishai Shoham, head of product at crypto infrastructure firm Utila. “After Bybit, custody structure grew to become a first-order danger subject, not a back-office element.” 

The incident additionally prompted the Monetary Motion Process Power (FATF) to induce world regulators to handle illicit finance dangers in cryptocurrencies, whereas exchanges tightened transaction approval processes and raised the usual for the way breaches are detected and dealt with.

What’s FATF and why does it matter?

The FATF is an intergovernmental physique that units requirements on cash laundering and terrorist financing. Its suggestions usually are not legally binding, however its members are anticipated to abide by its requirements. For non-members that fall brief, inclusion on the FATF grey record might restrict entry to assist and injury banking relationships.

In a June 2025 report, the FATF cited the Bybit hack as the biggest crypto theft ever. It warned that crosschain exercise, stablecoins and uneven world enforcement have been amplifying illicit finance dangers quicker than current controls might include them.

“The case highlights persistent gaps in the Journey Rule and in enforcement. As soon as funds transfer into DeFi, it turns into tough to stop layering and cash laundering, significantly as automation instruments make these processes quicker and simpler,” Joshua Chu, asset restoration lawyer and co-chair of the Hong Kong Web3 Affiliation, instructed Cointelegraph.

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FATF urged jurisdictions to speed up licensing, supervision and worldwide coordination, framing the incident as proof that weaknesses in custody and transaction oversight now pose systemic dangers to the worldwide monetary system. Just like the US Federal Bureau of Investigation and countless security experts, FATF linked the exploit to hackers tied to North Korea.

“When you ask who essentially the most influential particular person in crypto was in 2025, I might say Kim Jong Un. Regardless of the political consideration on crypto laws and requirements alignment, what dominated the FATF report was the Bybit hack.”

Across the similar time, Singapore tightened its licensing regime, ordering unlicensed crypto companies to both obtain permits or leave the market. Whereas Singapore drew a lot of the headlines, regulators in international locations corresponding to Thailand and the Philippines have been pursuing similar enforcement campaigns.

Custody safety and laundering assumptions break down

The {industry}’s understanding of each custody security and illicit fund movement shifted following the Bybit hack.

Shoham stated the breach made clear that the first weaknesses have been not cryptographic.

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“As soon as funds go away a compromised pockets, attackers can atomize and recompose worth throughout chains quicker than human response cycles,” he stated.

This shift modified the {industry}’s perspective from treating mixers as the first menace to recognizing that decentralized routing infrastructure itself allows large-scale, automated theft.”

The Bybit hack additionally reignited a long-running debate over crosschain infrastructure and the tasks of decentralized protocols. As stolen funds moved throughout chains, consideration as soon as once more turned to routing networks corresponding to THORChain and eXch, which have been used by attackers to swap assets with out counting on centralized intermediaries.

Supporters of decentralized fashions argued that such protocols are impartial infrastructure, designed to function with out discretion or gatekeeping. Critics countered that their structure makes them uniquely enticing for laundering massive volumes of stolen belongings, significantly when mixed with automation and fragmented liquidity throughout chains.

Some swappers like eXch ended up shutting down not lengthy after the hack. 

Bybit units new requirements for disaster response

The Bybit hack crystallized a broader shift in how the {industry} approaches each custody and compliance. As crosschain motion accelerates and static controls fall brief, exchanges and infrastructure suppliers are more and more anticipated to use governance on the stage of transaction habits quite than rely solely on address-based restrictions.

For Bybit, the $1.4 billion breach might have marked the start of a chronic collapse. Given the trade’s dimension, early fears centered on the potential for an FTX-like contagion that might have triggered one other industry-wide downturn simply as markets have been recovering.

As an alternative, the trade’s response set a unique precedent. CEO Ben Zhou appeared publicly all through the incident, internet hosting livestreams to replace customers on restoration efforts. Relatively than halting withdrawals, a standard reflex throughout crises, Bybit kept them open and sourced Ether from companion exchanges to satisfy fast buyer demand.

That strategy has since influenced how different platforms put together for and reply to main breaches. 

Withdrawal freezes are not the default response, and real-time communication has change into a baseline expectation. Regardless of the dimensions of the hack, Bybit stays one of many largest exchanges globally and ceaselessly ranks because the second-largest platform by day by day buying and selling quantity.

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