Copper noted that on Friday, 21 February 2025, the digital assets industry witnessed one of the largest centralized exchange security breaches in history, affecting Bybit.
As the situation developed, Copper’s Security and Financial Risk teams closely monitored events and “took necessary precautions to protect client assets and minimize risk exposure.”
This incident highlights the importance of resilient infrastructure in digital asset markets and “demonstrates how Copper’s ClearLoop’s safeguards operate in real-time.”
ClearLoop is built to “minimize counterparty risk” through multiple layers of protection:
- Bankruptcy-remote custody: Client assets remain fully protected under a trust structure, whether delegated to an exchange or not.
- Intraday settlement cycles: Continuous profit and loss (PnL) settlement dynamically reduces exposure throughout the day.
- Exchange collateral: Exchanges on ClearLoop post collateral, providing an additional financial buffer that is actively monitored and adjusted.
The collateral that exchanges post is subject to “a security agreement under English law.”
These safeguards ensure that even in “extreme market events, risk is contained and managed effectively.”
As reports of the breach surfaced, Copper’s teams immediately began monitoring asset flows and exchange activity.
Once Bybit confirmed the security incident, Copper enacted “risk mitigation protocols, ensuring controlled settlements and protecting client positions.”
ClearLoop facilitated the protection of over $1.6 billion in delegated balances on Bybit, “maintaining operational stability despite the market disruption.”
While an unusually high withdrawal queue at Bybit temporarily delayed processing times, ClearLoop’s multi-layered safeguards “ensured that settlements were completed in an orderly manner.”
Unlike traditional financial markets—where similar settlement risks can take days or even weeks to resolve—ClearLoop’s real-time settlement cycles contained “risk exposure within hours, reinforcing the efficiency of its infrastructure.”
The incident understandably raised concerns about Bybit’s financial standing.
However, Bybit has maintained open communication throughout, and its most recent Proof-of-Reserves audit, “conducted by Hacken on 23 February 2025, confirmed that its assets exceed its liabilities.”
This reflects the industry’s ongoing shift “toward greater transparency and accountability.”
This event underscores why risk management is just “as critical as technology in digital asset markets.”
While ClearLoop’s infrastructure mitigated risk in real-time, Copper continues to work with exchanges to “enhance settlement efficiency and liquidity management, ensuring even greater resilience in volatile market conditions.”
Copper says that it remains committed to delivering institutional-grade security, operational transparency, and robust risk management—because protecting client assets “isn’t just about responding to crises, but ensuring resilience from the start.”
