ETH stolen from Bybit has been entirely laundered

Bybit CEO Ben Zhou said that all ETH stolen from the exchange on February 25th have already changed hands. Notably, 83% of the funds were converted to bitcoins.

In other words, the current owners of the stolen ETH are most likely unrelated to the original thieves. If one were to track the movement of these stolen funds, bitcoins would be the primary focus. And tracing bitcoins is much more challenging - they can be transferred through the Lightning Network without leaving blockchain traces.

A few days ago, I warned you against purchasing ETH due to the increased likelihood that the ether you acquire might be declared stolen. Does today's news mean that ETH is now safe to buy again?

Honestly, I'm highly skeptical. AML (Anti-Money Laundering) systems that tag cryptocurrencies as "tainted" are quick to apply these labels but not nearly as quick to remove them. Strictly speaking, the only chance to remove such a tag is if the current owner directly approaches the blockchain tracking company and attempts to prove they acquired the cryptocurrency through legitimate means. And even then, I haven't heard of successful cases.

So no, ETH hasn't become any safer to acquire. The only thing I can guarantee on behalf of rabbit.io is that our liquidity providers strive to check whether incoming cryptocurrency is flagged. If a cryptocurrency carries a high risk, it's typically returned to the sender rather than passed on to new clients. Therefore, exchanging with us is safer than in many other places.

But overall, the cryptocurrency industry certainly needs a different approach to risk assessment. For those who don't recall - I wrote about this in detail here.