Ethereum Developer Explains Why Bybit’s $1.4 Billion Stolen Funds Cannot Be Recovered Through Rollback

Why Rollbacks Are No Longer Viable

A recent explanation by Ethereum developer Tim Beiko sheds light on why the network cannot “rollback” transactions to recover Bybit’s stolen $1.4 billion. The analysis draws parallels with historical cases where blockchain reversals were feasible, including Bitcoin’s successful rollback in 2010 and Ethereum’s The DAO hack recovery in 2016.

Historical Precedents

In 2010, Bitcoin successfully rolled back transactions when a bug created 184 billion BTC. According to Beiko, this was possible due to the network’s small size and clear protocol violation. Similarly, Ethereum’s The DAO hack recovery succeeded because the stolen funds were frozen for 30 days, allowing time for community coordination.

The Bybit Hack: A Different Challenge

The Bybit hack, however, has fundamentally different challenges. The theft occurred through a compromised multisig interface that made malicious transactions appear legitimate to signers. From Ethereum’s perspective, these transactions followed all protocol rules, leaving no technical basis for intervention.

Key Takeaways:

  • The stolen funds were immediately mobile and could be routed through decentralized exchanges, lending protocols, and cross-chain bridges.
  • Any attempt to reverse transactions would create disruption across the ecosystem, affecting legitimate trades and settlements.

Technical Limitations and Concerns

Ethereum can still theoretically implement “irregular state changes” when funds are frozen and isolated. However, the last such proposal in 2018 faced strong opposition due to concerns about centralization and precedent.

“The quick movement of assets through mixing services shows why technical solutions like rollbacks are no longer viable for major thefts in today’s crypto ecosystem.”

Crypto Mixer Platform Rejects Cooperation

Crypto mixer platform eXch has rejected Bybit’s request for cooperation in tracking the stolen funds. SlowMist, a blockchain security firm, reports that hackers have already begun laundering the ETH through eXch, converting it to Bitcoin, Monero, and other cryptocurrencies.

Tips for Exchanges:

  • Increase risk controls for funds originating from eXch.
  • Improve security measures to prevent similar incidents.

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