👉 Background: Bybit was founded back in 2018 and has grown to become the second largest largest crypto exchange in the world by trading volume - with over 60 million users worldwide.

👉 What happened: But now, it’s not just the meme-coin traders crying into their keyboards—it’s Bybit itself. It sheepishly announced that it was hacked, with more than $1.5 billion USD stolen from their account. That’s like misplacing a small country’s GDP. And this heist was the biggest crypto theft in history.

👉 What else: The heist happened during a routine transfer from their offline “cold” wallet to a “warm” wallet. Just as Bybit’s team was trying to send the money from one wallet to another, the hackers intercepted and transferred it to an unknown crypto wallet. And no surprises here - the price of bitcoin and other crypto currencies dropped more than 3%.

What's the key learning?

💡The warmer the wallet, the more vulnerable it becomes.

💡In the world of cryptocurrency, wallets are classified into three categories:

• Cold wallets are offline storage solutions. It's a device or method for storing cryptocurrency private keys offline. The private key could be held via cold hardware devices or even stored on a piece of paper.
• Warm wallets are a hybrid between cold and hot wallets and they’re connected to the internet but only temporarily or for specific transactions. In Bybit’s case, the hack occurred when funds were moved from a cold wallet to a warm wallet - so clearly there is still risk.
• Hot wallets are fully connected to the internet and most vulnerable to hacking. And if you’re investing on platforms like Coinbase or Binance, you’ve got a smokin’ hot wallet — it's convenient but the easiest targets for cyberattacks.

💡Each additional crypto hack reminds investors of the risks associated with digital assets.That’s part of the reason why crypto exchange Coinbase saw its share price drop 8% after this Bybit hacking news.