Dubai’s Virtual Assets Regulatory Authority (Vara) is closely monitoring the aftermath of a $1.4 billion hack at Bybit, one of the world’s largest cryptocurrency exchanges. The attack, which occurred on February 21, exploited a smart contract during a routine transfer between Bybit’s «cold» and «hot» wallets. The breach resulted in hackers stealing ETH400,000, worth approximately $1.4 billion at the time.
A Vara spokesperson confirmed that the authority has been actively tracking the situation since it was reported, with plans to continue monitoring the evolving incident. Although Bybit has applied for a license from Vara, it is not yet officially licensed by the authority, which regulates the Dubai emirate alone within the UAE.
The breach has had a significant impact on the exchange, triggering over $5 billion in withdrawals from Bybit. In response, the company is offering a reward of up to $140 million—10% of any recovered funds—to cybersecurity experts and blockchain analysts who assist in tracing and retrieving the stolen assets.
Despite the hack, Bybit co-founder and CEO Ben Zhou reassured users that client funds remained safe, stating that the exchange was solvent even if the stolen funds were not fully recovered. He emphasized that all client assets are fully backed on a one-to-one basis. Bybit currently holds $20 billion in assets, with its “cold” wallet—used for more secure offline storage—containing nearly $3 billion in USDT, a stablecoin that is still secure.
In an effort to maintain liquidity, Bybit is exploring the option of a bridge loan from its partners. Zhou mentioned that the exchange is in discussions with multiple partners and is using other collateral, such as bitcoin and stablecoins, to secure the loan. Withdrawals remain open, with retail clients being prioritized over VIP and institutional investors. Bybit processed over 350,000 withdrawal requests within 12 hours of the attack.
Vara’s ongoing oversight of the situation reflects its role in regulating Dubai’s cryptocurrency landscape, while Bybit continues efforts to recover from the largest hack in crypto history.
