Bybit Hack, the recent $1.5 billion heist that occurred on 21 Feb, has tragically exposed the vulnerabilities of Web3 infrastructure. Through the collaborative efforts by the leading exchanges, over $170 million was injected into the market. However, with no denial, the incident has awakened the whole Web3 industry to work towards safeguarding its infrastructure.
According to Hotcoin Global, the Australia-based Cryptocurrency exchange, the Bybit incident has reaffirmed the fact that cryptocurrency exchanges have become prime targets for nation-state Advanced Persistent Threat (APT) groups.
William Chan, Chief Advisor at Hotcoin Global, says, “Security is not a zero-sum game. We are committed to transforming our defense system into a public good for the industry.”
Further, the exchange is advocating for the creation of an ‘Exchange Security Mutual Assistance Alliance’, exemplifying its Seven-Year Zero-Incident defense mechanism.
In its comprehensive analysis of the Bybit Hack, Hotcoin reveals that Lazarus Group, one of the most formidable cybercriminal organizations, has carried out over 50 major attacks since 2010, demonstrating three key trends:
- Target Specialization: Shifted from traditional financial institutions to cryptocurrency, inflicting over $300 million in losses in 2023 alone.
- Systemized Attack Methods: Developed a full-fledged ecosystem combining vulnerability exploitation, social engineering, and coin-mixing for laundering stolen assets. North Korean universities even train specialists in blockchain offense and defense.
- Diversified Attack Vectors: High-profile incidents such as the $620 million Axie Infinity cross-chain bridge hack (2022) and the $100 million Atomic Wallet private key breach (2023) have exposed systemic weaknesses in exchange security.
Further, in the Bybit heist, hackers exploited undisclosed vulnerabilities in the hot wallet system. There are certain exchanges that opt for offshore registration to evade regulatory oversight, however, it ends up in exposing them and their users to “license-free risks.”
Calls for Shared Security after Bybit Hack via Diamond Shield Program
In a further step towards bolstering the Web3 security, Hotcoin Global has announced the launch of Diamond Shield Program. The launch of the Diamond Shield Program comes as Hotcoin Global’s response to its analysis of the Bybit Hack. The program aims to signify Hotcoin’s shift from existing passive defence mechanisms to proactive ecosystem-wide security collaboration.
Hotcoin Global’s newly launched initiative, Diamond Shield Program, marks a shift from passive defense to proactive ecosystem-wide security collaboration.
Embracing 200% Reserve Policy in addition to full asset reserves, it aims to create a dedicated hedge fund that covers all the extreme market fluctuations.
Further, it is also pioneering a decentralized Insurance Pool in partnership with Nexus Mutual. With this, users will be able to stake HT tokens for theft compensation, fostering risk-sharing mechanisms.
Hotcoin Global will provide exchanges with access to geographically distributed cold wallet architecture, zero-trust micro-segmentation, and AI-driven threat detection models. This paradigm shift in security resembles the 2017 regulatory overhaul that reshaped market order—exchanges must now rebuild trust through verifiable security and quantifiable risk management.
The Diamond Shield program also includes a Global Incident Response Network under which a cross-timezone attack mitigation framework spanning Sydney, Singapore, and Canada would be established. It will provide plug-and-play security solutions for smaller exchanges – in a move towards equitable security access.
Efforts towards industry-wide collaborative security measures
After the Bybit Hack, security has become a more critical and integral part of Crypto Exchanges’ operations and forms the basis of trust and faith for their users’ digital assets. Hotcoin Global uses a multi-layered defense mechanism to safeguard the digital assets of its users. As part of its physical Layer Defense, it uses Cold-Hot Wallet Segmentation in which its 98% of assets are stored in geographically distributed multi-signature cold wallets, implementing a dynamic risk-based limit model.
It further uses Hardware-Level Encryption in which Private keys are sharded and stored in Swiss Vault-grade HSM modules.
For the Real-Time Defense System (Technical Layer Defense), it uses an AI-integrated deep-learning model trained on over 200TB of attack patterns, enabling 0.01% anomaly detection in fund movements. Hotcoin Global has also partnered with CertiK and SlowMist for pre-deployment audits and real-time runtime monitoring.
Thus, as Hotcoin Global aims to turn security from a cost center into a value-creation engine by its Diamond Shield Program and by opening its geographically distributed cold wallet architecture, the efforts towards web3 infra security are set to strengthen. The battle against state-backed hackers has never been a fight for one exchange alone – it is indeed a collective industry imperative.
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