What the Bybit Hack and Crypto’s Long History of Breaches Mean for Users Today

Cryptocurrency was built on a promise: remove the need for blind trust by replacing it with math, transparency, and decentralization. That promise has been tested repeatedly—by flawed code, compromised platforms, social engineering, and human error. Each major breach reminds the industry of an uncomfortable truth: while blockchains themselves may be resilient, the systems and people surrounding them often are not. 

Chainalysis’ 2026 crypto crime report stirred tons of discussions about crypto security at the beginning of 2026. According to the report, illicit cryptocurrency activity reached an all-time high in 2025, with illicit addresses receiving at least $154 billion (a 162% YoY increase). 

The Bybit hack of 2025 is the latest in a long list of significant security failures over the past decade—security failures that have cost users billions. While no single incident defines crypto as a whole, together they form a pattern worth examining—especially for everyday users who may not have the resources or technical knowledge to recover from a major loss.

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The $1.4 Billion Bybit Hack

In February 2025, Bybit disclosed a major security incident involving unauthorized access and large-scale asset losses, attributed to North Korea’s Lazarus Group. Subsequent reporting and blockchain analysis estimated the total theft at approximately $1.4 billion worth of Ethereum and related assets.

What made the Bybit incident especially notable wasn’t just the dollar amount, but the timing. By 2025, centralized exchanges were operating under far more scrutiny than in previous years, with audits and regulatory pressure becoming expected and normalized. The industry thought it had learned from the Mt. Gox collapse and other breaches of the past. Users understood the concept of cold storage and how to use multi-signature wallets. And yet, despite modern safeguards, the breach cybersecurity experts are calling the largest-ever crypto theft on record still occurred.

The Bybit hack reinforced a harsh but familiar truth: when users rely on centralized platforms, they inherit the platform’s risk profile—whether they realize it or not. Cold storage does not eliminate all risk, but it greatly limits exposure by keeping private keys offline and out of reach of most large‑scale attacks.

A Brief History of Major Crypto Hacks and Scams

Security failures have shaped crypto’s evolution from the beginning. To name a few:

• Mt. Gox (2014): Once handling the majority of Bitcoin trades, Mt. Gox collapsed after losing hundreds of thousands of BTC, permanently changing how users viewed custodial risk.

• Bitfinex (2016): A sophisticated multi-signature setup failed under real-world conditions, resulting in massive losses and a controversial recovery strategy.

• DeFi exploit wave (2020–2022): Smart contract bugs, flash-loan attacks, and unaudited protocols led to frequent losses—sometimes within hours of launch.

• FTX collapse (2022): Not a hack in the technical sense, but a reminder that fraud, mismanagement, and a lack of transparency can be just as destructive as external attacks.

By 2025, a growing percentage of losses stemmed from wallet compromises, phishing campaigns, malicious approvals, and social engineering—less about breaking systems, more about abusing trust. Users relying on hot wallets and custodial services bore the majority of losses, while long‑term holders using cold storage were largely unaffected by these trends.

The Current State of Crypto Security

Crypto security in 2025 is both more sophisticated and more demanding than ever.

On one hand, hardware wallets are widely available, multi-factor authentication is standard, and audits and bug bounties are common. On the other hand, attackers are more professional, scams are more targeted, and users interact with more chains, apps, and permissions than ever before.

Recent thefts—including the massive Bybit loss—demonstrate that the weakest link is rarely the blockchain itself. Assets secured in properly managed cold storage are not exposed to phishing, malicious approvals, or exchange‑level compromises in the same way. Instead, it is the layer where humans and software meet: browser wallets, signing prompts, recovery phrases, and custodial infrastructure.

For everyday users, this means security is no longer passive. Simply holding crypto now requires ongoing attention and a basic understanding of which risks are being accepted in exchange for convenience. In other words, maintaining a “set it and forget it” mentality and relying on custodial services could potentially spell complete financial disaster for you.

Who Can Steal From You—and How (A Simple Threat Model)

Crypto threats are not abstract. They fall into a small number of repeatable categories:

• External attackers

Hackers, phishing operators, and organized scam networks.

• Methods: fake websites, malicious approvals, wallet drainers, impersonation.

• Target: user behavior rather than cryptography.

• Platform failures

Centralized exchanges and custodial services.

• Methods: compromised internal systems, key mismanagement, insider access.

• Example: the 2025 Bybit hack, which resulted in approximately $1.4 billion in stolen assets.

• Smart contract risk

Malicious or poorly designed on-chain code.

• Methods: logic flaws, upgrade abuse, incomplete audits.

• Risk increases with experimental or rushed deployments.

• User error 

One of the most common yet overlooked threats.

• Methods: reused passwords, digital storage of seed phrases, ignoring permission scopes, acting under urgency.
  

Understanding which of these applies to your setup matters more than following any single security rule.

Practical Tips for Protecting Your Assets

No security setup is perfect, but most losses are preventable—and cold storage (like Ballet REAL Series Cold Storage) remains the single most effective baseline defense for long‑term holdings.

1. Separate storage by risk

Keep long-term holdings in cold storage, where private keys remain offline. Use hot wallets only for active use such as trading, spending, or interacting with applications.

2. Treat recovery phrases like cash

Never store seed phrases digitally. No screenshots, no cloud backups, no notes.

3. Review and revoke permissions regularly

Old approvals are a common attack vector.

4. Assume phishing is targeted

Slow down when faced with urgency, especially involving account access or security alerts. Scammers often push you to act quickly so they can snatch up your funds and disappear before you have a chance to see through them.

5. Limit trust in platforms

Exchanges are conveniences, not guarantees. Responsibility for your asset security ultimately still falls to you.

6. Plan for failure

Decide in advance how much loss you could tolerate—and never exceed it. Make sure you’ll be able to survive and recover from any loss.

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The Bybit hack and other crypto crimes of 2025 and beyond did not invalidate crypto, but instead reinforced an old lesson: technology does not eliminate risk—it redistributes it. Crypto gives users unprecedented control over their assets, but that control comes with responsibility. Choosing cold storage for assets you cannot afford to lose is less a best practice than a minimum standard. 

Hacks will continue to happen. The real question is whether users understand the systems they are participating in—and whether they are prepared for the consequences when trust fails. Be prepared by keeping assets you don’t intend to spend on a secure wallet like the Ballet REAL Series—a physical, non-electronic hardware wallet that’s self-custodial and fully offline. Pair a REAL wallet with the Ballet Crypto app for all your crypto needs. Whether you’re buying, swapping, or selling crypto, Ballet’s full ecosystem minimizes the attack surface from every angle, providing users everywhere with vault-level security for their digital assets.