OTCs at risk of a mass freeze in the wake of the $1.5b Bybit hack
Bitrace predicts that OTC services could face a large-scale freeze wave after the massive Bybit hack which resulted in a loss of over $1.5 billion.
Bitrace, a joint crypto tracing and analysis platform, warned users that a mass freeze of over-the-counter or OTC products and services could be on the horizon, following the aftermath of the Bybit hack believed to be executed by the North Korean hacker group, Lazarus Group.
“In the next few months, there will be a large-scale freeze wave targeting OTC groups and crypto payment companies,” said Bitrace in a translated analysis article.
Bitrace calls the Bybit hack the “largest single theft in the history of cryptocurrency” as it surpassed previous hacks in losses, such as Poly Network’s hack of $611 million in 2021 and Ronin Network’s loss of $620 million in an exploit in 2022.
The analysis firm brings up examples of past exploits by the Lazarus Group, such as the attack on Japanese cryptocurrency exchange DMM last year and the Poloniex breach in 2023. Both hacks resulted in the freezing of of a large number of OTC business addresses and wallets, largely impacting the crypto industry.
Throughout their investigations, Bitrace found that hackers have a tendency to not only use unlicensed platforms and mixers to launder their stolen funds. Hackers also utilize centralized platforms and OTC merchants to process the funds.
As a result, a large number of user accounts on major exchanges ended up intentionally or unintentionally receiving the stolen funds. These accounts were subject to risk control, leading to business addresses of OTC merchants and payment institutions being frozen by Tether (USDT) after major hacks.
The attack on Bybit was discovered after the exchange detected unauthorized transfers from an Ethereum (ETH) cold wallet. Bybit then launched an investigation into the transfers, partnering with blockchain forensics experts to trace the stolen assets.
As previously reported by crypto.news, Bybit CEO Ben Zhou claimed that the exchange has successfully recovered the loss suffered from the hack within two days. He also told traders that an audited plan-of-record report will be published soon to show that the exchange has “fully closed the ETH gap.”
