The most puzzling part of the Bybit hack

In the recent Bybit hack, I noticed something particularly puzzling: even after rumors of a massive unauthorized ETH withdrawal were confirmed, people in the P2P section were still posting offers to buy ETH at near-market prices.

Think about it:

• Everyone knew there wasn't enough ETH on the exchange (most of it had been stolen).
• Everyone understood that ETH withdrawal requests would most likely fail.
• Yet people were still willing to buy ETH on Bybit with almost no discount.

I monitored the P2P section for several hours. While the market price of ETH fluctuated significantly, the prices in P2P listings closely followed these fluctuations.

This suggests that traders value the exchange's obligation to deliver cryptocurrency the same as the cryptocurrency itself - even when it's absolutely clear that the exchange doesn't have the assets to fulfill these obligations.

Just two years ago, we all witnessed the FTX collapse - another major exchange that didn't have enough crypto to meet its customer obligations.

While Bybit managed to resolve the situation with a large ETH loan from its partners, it's concerning that the market still doesn't differentiate between IOUs and actual cryptocurrency. This vulnerability could be exploited by fraudsters in the future. That's why it's more crucial than ever to carefully choose where you store and trade your crypto.

At rabbit.io, we're here to help. We don’t hold your crypto - we send it directly to the address you specify.