The lion’s share of the hacked Bybit funds is still traceable after the historic cybertheft, as blockchain investigators continue their efforts to freeze and recover these funds.

The crypto industry was rocked by the largest hack in history on Feb. 21, when Bybit lost over $1.4 billion in liquid-staked Ether (stETH), Mantle Staked ETH (mETH) and other digital assets.

Blockchain security firms, including Arkham Intelligence, have identified North Korea’s Lazarus Group as the likely culprit behind the Bybit exploit, as the attackers have continued swapping the funds in an effort to make them untraceable.

Despite the Lazarus Group’s efforts, over 88% of the stolen $1.4 billion remains traceable, according to Ben Zhou, the co-founder and CEO of Bybit exchange.

The CEO wrote in a March 20 X post:

“Total hacked funds of USD 1.4bn around 500k ETH. 88.87% remain traceable, 7.59% have gone dark, 3.54% have been frozen.”

“86.29% (440,091 ETH, ~$1.23B) have been converted into 12,836 BTC  across 9,117 wallets (Average 1.41 BTC each),” said the CEO, adding that the funds were mainly funneled through Bitcoin (BTC) mixers, including Wasbi, CryptoMixer, Railgun and Tornado Cash.

Source: Ben Zhou

The CEO’s update comes nearly a month after the exchange was hacked. It took the Lazarus Group 10 days to launder 100% of the stolen Bybit funds through the decentralized crosschain protocol THORChain, Cointelegraph reported on March 4.

Still, blockchain security experts are hopeful that a portion of these funds can be frozen and recovered by Bybit.

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The crypto industry needs more blockchain “bounty hunters” and white hat, or ethical hackers, to combat the growing illicit activity from North Korean actors.

Decoding transaction patterns through cryptocurrency mixers remains the biggest challenge in tracing these funds, Bybit’s CEO wrote, adding:

“In the past 30 days, 5012 bounty reports were received of which 63 were valid bounty reports. We welcome more reports, we need more bounty hunters that can decode mixers as we need a lot of help there down the road.”

Bybit paid $2.2 million for Lazarus “bounty hunters”

Bybit has awarded over $2.2 million worth of funds to 12 bounty hunters for relevant information that may lead to the freezing of the funds, according to LazarusBounty, a website dedicated to tracking Bybit bounty payouts.

The exchange is offering 10% of the recovered funds as a bounty for white hat hackers and investigators.

Bybit’s bounty payout details for Lazarus-linked hack. Source: LazarusBounty

Related: Bybit exploit exposes security flaws in centralized crypto exchanges

The Bybit attack highlights that even centralized exchanges with strong security measures remain vulnerable to sophisticated cyberattacks, analysts say.

“This incident is another stark reminder that even the strongest security measures can be undone by human error,” Lucien Bourdon, an analyst at Trezor, told Cointelegraph.

Bourdon explained that attackers used a sophisticated social engineering technique, deceiving signers into approving a malicious transaction that drained crypto from one of Bybit’s cold wallets.

The Bybit hack is more than twice the size of the $600 million Poly Network hack in August 2021, making it the largest crypto exchange breach to date.

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A Coinbase report revealed that the crypto exchange is the largest node operator on the Ethereum network, controlling 11.42% of the total staked Ether.

In a performance report, Coinbase said it had 3.84 million Ether (ETH), worth about $6.8 billion, staked to its validators. The exchange said that, as of March 3, it has 11.42% of the total staked ETH. 

Anthony Sassano, host of The Daily Gwei, said that Coinbase’s stake makes the exchange the “single largest node operator” in the network. 

Sassano added that while the staking platform Lido is bigger as a collective, each node operator has a much smaller percentage share. 

Source: Anthony Sassano

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Coinbase validator uptime and participation rate at 99.75%

Coinbase also shared that it exceeded its target for validator uptime, which indicates the percentage of time when validators are operational. It also had a similar figure for its participation rate, a metric that indicates how well validators perform their consensus duties.

Coinbase also reported that its validators had an average uptime of 99.75%. Coinbase said they outperformed their target of 99% uptime without compromising security standards. 

The exchange attributed the performance to an upgrade implemented in 2024, which allowed the exchange to keep validators running while performing beacon node maintenance. 

Meanwhile, Coinbase validators’ participation rate is also at 99.75%. This exceeds the network average of 99.52%. In addition, the Coinbase average for signing and submitting blocks produced by their MEV relays is 99.76%, higher than the network average of 99.38%. 

While Coinbase operates a centralized exchange platform, the company said it distributes its validators across several regions to “help maintain a truly distributed and decentralized Ethereum blockchain.” The exchange said its validators operate in Japan, Singapore, Ireland, Germany and Hong Kong. 

Coinbase validator average performance versus Ethereum network averages. Source: Coinbase

Ether surges above $2,000 on March 20

Coinbase’s recent report was followed by a surge in ETH prices as ETH accumulation addresses started stockpiling significantly. 

7-day ETH price chart. Source: CoinGecko

On March 2, Ether hit a weekly high of $2,060.73, surging by 12.3% in seven days. On March 19, the asset’s daily trading volume reached $17.4 billion as its price surpassed $2,000. 

The surge comes as ETH price sentiments turned bearish. On March 11, Yuga Labs’ vice president of blockchain suggested that ETH could drop as low as $200 in a prolonged bear market. 

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Bitcoin is unlikely to revisit the $77,000 price level anytime soon after the Fed signaled a slowdown in quantitative tightening (QT), says BitMEX co-founder Arthur Hayes.

On March 10, Bitcoin (BTC) dipped near the $77,000 level for the first time since November, according to CoinMarketCap data.

“Was BTC $77k the bottom, prob,” Hayes said in a March 20 X post after declaring that QT is “basically over” following the Fed’s March 19 announcement that starting in April, it will slow its securities sell-off by reducing the monthly Treasury cap from $25 billion to $5 billion. 

Bitcoin is up 3.53% over the past seven days. Source: CoinMarketCap

This could ease liquidity pressures and support risk assets like Bitcoin, as QT involves central banks selling assets to reduce the money supply and possibly raise interest rates. 

“The next thing we need to get bulled up for realz is either SLR exemption and or a restart of QE,” Hayes added.

The Supplementary Leverage Ratio (SLR) exemption was a temporary rule during the COVID-19 pandemic that allowed banks to exclude US Treasury securities from their SLR calculations. Meanwhile, quantitative easing (QE) is a monetary policy that aims to stimulate the economy and encourage more spending.

Echoing a similar sentiment to Hayes, Real Vision chief crypto analyst Jamie Coutts said in a March 19 X post that “QT is effectively dead.” Coutts explained that “treasury volatility” has calmed down following the US dollar’s drop earlier this month, a positive signal for boosting liquidity.

Other optimists included Axie Infinity co-founder Jeff “JiHo” Zirlin, who said the Fed slowdown is “great for both crypto and equity markets.”

“The Fed has significant leeway to loosen up, providing more support for businesses + markets,” Zirlin said, while Bitcoin venture capitalist Mark Moss said that with QT ending, “the dam is going to break.”

Related: Bitcoin risks new ‘death cross’ as BTC price tackles $84K resistance

Meanwhile, crypto market sentiment has spiked following the Fed’s comments. 

The Crypto Fear & Greed Index, which tracks overall sentiment, has moved into “Neutral” territory at 49 after lingering in the “Fear” area since Feb. 26.

Despite Bitcoin being down nearly 22% from its January $109,000 all-time highs, Infinex founder Kain Warwick told Cointelegraph that it is a “normal mid-bull correction.”

“I would need to see a much larger breakdown to flip bearish,” Warwick said. “My baseline thesis is the four-year cycle holds once again, which means we keep grinding up through the rest of the year.”

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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.