On Friday, February 21, 2025, the cryptocurrency ecosystem was rocked by one of the largest hacks in its history: a meticulously executed theft of nearly $1.5 billion worth of Ethereum tokens (and some other cryptocurrencies) from Bybit, a prominent crypto exchange. Although many of these funds have been recovered or frozen by various industry participants/service providers, there are still many more ETH tokens actively being sold and/or converted via mixers.
The incident has sparked debate within the industry, with BitMEX co-founder Arthur Hayes igniting controversy by proposing a rollback of the Ethereum blockchain to undo the damage. This would essentially roll back the state of the Ethereum network to a point when the malicious ETH transfers are basically reversed. However, this is against the immutability principle of blockchains but ETH was rolled back several years following a massive exploit.
Understandably, the suggestion has drawn both support and sharp criticism, reigniting a philosophical clash between blockchain immutability and pragmatic damage control—a tension that echoes Ethereum’s controversial 2016 DAO hack.
With the hack linked to North Korean actors, sophisticated phishing techniques, and a compromised multi-signature wallet system, the Bybit incident raises important and interesting questions about security, decentralization, and the future of Ethereum.
Notably, the Bybit hack was not a typical smart contract exploit or a brute-force attack.
Instead, it was a carefully orchestrated operation that targeted the exchange’s Ethereum cold wallet, siphoning off approximately $1.4 billion to $1.5 billion in ETH (figures vary slightly across reports).
According to CertiK’s technical analysis, the attackers employed a phishing scheme that bypassed Bybit’s multi-signature (multisig) safeguards.
By compromising devices through social engineering and spoofing the user interface of Safe{Wallet} and Ledger hardware wallets, the hackers tricked signers into approving a malicious contract upgrade.
This altered the smart contract logic, granting the attackers unrestricted access to the funds.
Chainalysis and TRM Labs both point to the Lazarus Group, a notorious North Korean state-sponsored hacking collective, as the likely culprit.
The attackers moved the stolen ETH through a series of mixers and privacy-focused services, a common practice employed by DPRK-linked operations.
Elliptic’s report highlights the scale of the heist, noting it as the largest single-incident crypto theft to date, surpassing even the 2019 Binance hack ($546 million) and the 2022 Ronin Bridge exploit ($625 million).
SlowMist’s analysis adds that the hackers exploited “blind signing”—a vulnerability where signers approve transactions without fully understanding their implications—combined with a spoofed interface that mimicked legitimate wallet software.
The sophistication of the attack underscores a growing trend: hackers are shifting from broad, opportunistic exploits to precise, human-targeted operations.
Unlike the DAO hack of 2016, which exploited a flaw in a smart contract, the Bybit incident was a failure of operational security rather than blockchain code.
This distinction is crucial to understanding why Hayes’ rollback proposal has stirred such controversy.
In the wake of the hack, Arthur Hayes, a prominent figure in the crypto space and co-founder of BitMEX, suggested a radical solution: rolling back the Ethereum blockchain to a state prior to the theft.
This would effectively erase the transactions that moved the funds to the hackers’ control, restoring Bybit’s losses.
Hayes argued that Ethereum had already forsaken its claim to absolute immutability in 2016, when the DAO hack prompted a hard fork that split the network into Ethereum (ETH) and Ethereum Classic (ETC). If the community could justify a rollback then, he posited, why not now?
Hayes’ proposal hinges on a pragmatic view of blockchain as a tool for economic utility rather than an ideological purist’s dream of unalterable history.
He contends that Ethereum’s role as “money” or a foundational layer for decentralized finance (DeFi) was redefined post-DAO, making immutability a secondary concern to network stability and user trust.
With Bybit’s loss representing a significant chunk of ETH’s circulating supply, a rollback could, in theory, prevent cascading economic damage to the ecosystem.
Critics, however, argue that Hayes’ analogy to 2016 is flawed. Ethereum in 2025 is a vastly different beast from its nascent state nine years prior. Back then, the network was a fledgling experiment with a smaller user base and fewer dependencies.
The DAO hack, which saw $50 million (at the time) siphoned from a crowdfunding smart contract, led to a contentious hard fork that 90% of the community supported.
Today, Ethereum underpins a multi-trillion-dollar ecosystem of DeFi protocols, stablecoins, NFTs, and institutional adoption. Rolling back the chain now would disrupt millions of transactions, smart contracts, and secondary markets—a logistical and ethical nightmare.
Posts on X reflect this sentiment, with users noting that ETH now secures far more value and complexity than it did in 2016. A rollback could undermine confidence in Ethereum’s reliability, especially among enterprises and developers who rely on its permanence.
Furthermore, the Bybit hack targeted an exchange’s infrastructure, not Ethereum’s core protocol. Critics argue that penalizing the entire network for a centralized entity’s failure sets a dangerous precedent, blurring the line between decentralized principles and corporate bailouts.
From a technical standpoint, executing a rollback in 2025 would be far more challenging than in 2016. Ethereum’s proof-of-stake (PoS) consensus, implemented post-merge in 2022, relies on validators who stake ETH to secure the network.
Coordinating a rollback would require broad consensus among these validators, many of whom might oppose altering history for a single entity’s benefit. SlowMist’s report questions whether such a move is even feasible without fracturing the network, as dissenting nodes could refuse to adopt the rollback, leading to another chain split.
Ethically, the debate revives the “code is law” mantra that defined early blockchain philosophy. Proponents of immutability argue that transactions, even fraudulent ones, are sacrosanct once confirmed. Reversing them undermines the trustless nature of the system.
On the other hand, rollback advocates emphasize harm reduction: if the stolen funds fuel illicit activities (e.g., North Korean weapons programs, as TRM Labs suggests), the moral case for intervention strengthens.
Chainalysis emphasizes the DPRK connection, detailing how the Lazarus Group laundered funds through Tornado Cash and other mixers. They’re collaborating with Bybit and law enforcement to trace and freeze assets, though recovery odds remain slim given the hackers’ expertise.
This raises a practical counterpoint to Hayes’ idea: if on-chain recovery efforts can mitigate damage, why risk a rollback?
SlowMist dives into the hacker’s techniques, highlighting the role of social engineering and UI spoofing. They question whether Bybit’s security practices—relying on human signers rather than fully automated systems—were inherently flawed.
This suggests that the root issue lies with centralized exchanges, not Ethereum itself.
Elliptic’s analysis frames the hack as a wake-up call for the industry, urging better multisig designs and user education. They note that Bybit’s cold wallet, intended as a secure offline storage, was compromised via online vectors, exposing a gap between theory and practice.
TRM Labs reinforces the North Korean link, citing blockchain forensics that match the attack’s patterns to prior Lazarus operations. They argue that geopolitical stakes—not just financial ones—should inform the response, though they stop short of endorsing a rollback.
CertiK’s report outlines how blind signing and device compromise enabled the breach. They recommend enhanced wallet UIs and signer training, implicitly rejecting chain-wide solutions like rollbacks in favor of localized fixes.
The Bybit hack exposes persistent vulnerabilities in the crypto ecosystem. Cold wallets, multisig systems, and hardware devices—touted as gold standards—proved fallible against human error and sophisticated phishing.
This incident may accelerate adoption of more resilient security models, such as multi-party computation (MPC) or zero-knowledge proofs, which reduce reliance on single points of failure.
For Ethereum, the debate tests its maturity as a decentralized network. A rollback might stabilize short-term losses but erode long-term credibility, especially as competitors like Solana and Cardano vie for dominance.
Conversely, letting the hack stand could embolden state-sponsored actors, signaling that crypto remains an easy target.
The Bybit hack and Hayes’ rollback proposal mark a pivotal moment for Ethereum and the broader crypto industry.
At nearly $1.5 billion, the theft dwarfs past incidents, yet the response will shape perceptions of blockchain integrity for years to come.
Hayes’ call to action, while rooted in pragmatism, overlooks the evolved stakes of Ethereum’s ecosystem—a network no longer nimble enough for such drastic measures.
Industry analyses from Chainalysis, SlowMist, Elliptic, TRM Labs, and CertiK collectively point to operational failures, not blockchain flaws, as the culprit, suggesting that the solution lies in hardening exchange security rather than rewriting history.