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Manipulated wallet signing on Bybit custody incident shows audit badges risk
Bybit said the incident led to a $1.46 billion loss tied by the FBI to North Korea, and attackers reportedly took about 401,347 ETH.
CryptoSlate highlighted how crypto “audited” badges can mislead users about security, pointing to an incident in which Bybit’s Ethereum wallet signing process was manipulated. On Feb. 21, 2025 at 1:30 p.m. UTC, the exchange began moving funds from an Ethereum cold wallet to a warm wallet, and authorized signers approved the transfer while their screens allegedly showed an expected destination address instead of what the transaction actually did, according to the report.
CryptoSlate said Bybit later attributed the problem to a signing interface that was altered so signers saw the address they expected while an attacker gained control of the wallet transaction underneath. The outlet reported that Bybit placed the loss at $1.46 billion and that the FBI attributed the theft to North Korea, with attackers reportedly taking roughly 401,347 ETH and additional staked Ethereum assets.
The piece also cited Safe’s account that a compromised developer machine enabled a disguised malicious transaction, while external researchers found no vulnerability in Safe’s smart contracts or the source code for its front end and services. CryptoSlate argued the case illustrates a gap between code verification and human intent, describing how valid signatures can be enough once signers are shown a false representation of what they are authorizing.
Finally, CryptoSlate criticized how “audited” badges are presented on protocol websites as shorthand for end-to-end safety, even though security reviews may cover limited portions of code or a narrow time window. The outlet used examples of audit reports, such as OpenZeppelin’s, to emphasize that audits often describe specific files, review periods, and commits rather than offering a broad guarantee about every operational detail.
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