Alarm bells ring in crypto world after $2.4 billion hack

Recently, crypto executives have expressed worry about the spread of these high-risk cryptocurrencies, fretting that they could undo some of the progress the industry has made with lawmakers. Shortly before his inauguration, Trump put his own memecoin on sale — it shot up in value before crashing. More than 800,000 crypto accounts lost money.

“Memecoins aren’t just a casino — they’re worse,” Haseeb Qureshi, a crypto venture investor, wrote on social media this past week. “They’re a casino where each slot machine has a different owner, each trying to rip you off as much as they can before you move on to the next one.”

Under the Biden administration, federal regulators oversaw a wide-ranging crackdown on crypto, filing lawsuits against many of the industry’s biggest companies.

At the top of that list was Coinbase, a $US60 billion company that went public in 2021. Two years ago, the SEC sued Coinbase, arguing that the digital currencies sold on its platform were securities, just like the stocks and bonds traded on Wall Street. The regulators argued that Coinbase should have to register with the SEC and follow strict rules to protect investors from financial harm.

But the government’s posture toward crypto transformed when Trump took office. The president has his own crypto business, World Liberty Financial, giving him a personal stake in the industry’s success. And he has nominated a crypto industry ally, securities lawyer Paul Atkins, to lead the SEC, which has quickly cut down on its enforcement efforts.

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In a regulatory filing Friday morning, Coinbase announced that the SEC had agreed to drop its lawsuit without imposing any financial penalty. (The agreement requires approval by the agency’s commissioners, a process that is expected to be a formality.)

In celebratory social media posts, industry executives declared the end of a “siege against crypto” by the federal government.

The euphoria didn’t last long. Bybit, which is based in Dubai, United Arab Emirates, and processes tens of billions of dollars in daily transactions, revealed that thieves had breached its system, stealing huge quantities of ether.

Crypto has a long history of damaging hacks, but the theft from Bybit dwarfed the previous record, when thieves stole $US611 million in cryptocurrencies from a platform called PolyNetwork in 2021.

Even outside the crypto world, there is little precedent for a theft so big. “It may even be the largest single theft of all time,” said Tom Robinson, co-founder of Elliptic, a crypto analysis firm.

On social media, Bybit CEO Ben Zhou assured customers that the company was still solvent. “Even if this hack loss is not recovered, all of clients assets are 1 to 1 backed,” he wrote. “We can cover the loss.”

In a livestream Friday, Zhou, who was swigging Red Bull, said the “affected amount” was 401,000 ether, or about $US1.1 billion. Crypto forensics experts estimated the total at closer to $US1.5 billion, based on analysis of public transaction records.

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Bybit does not offer services to customers in the United States, according to its website. The company’s representatives did not immediately respond to a request for comment.

A crypto research group, Arkham Intelligence, said North Korean hackers were behind the Bybit breach. Attacks by North Korean groups have plagued the industry for years.

The price of bitcoin plunged from about $US100,000 early Friday to just more than $US95,000 that evening, a 5 per cent drop. Other cryptocurrencies fell even further.

And a day of celebration for Coinbase ended with a stock market plunge: By the time the market closed Friday, its shares were trading at their lowest price since November.