The Bybit hack this morning has had major consequences, with conflicting stories surrounding this security incident. The exchange is facing extremely high withdrawal demand while Pi Network has risen nearly 10%.

Due to high demand, users are having difficulty withdrawing, but CEO Ben Zhou has assured that withdrawals will remain open.

The Bybit hack has caused chaos in the crypto market

Bybit, one of the world's leading cryptocurrency exchanges, is going through a chaotic period. This morning, the exchange was hacked for $1.5 billion, and this incident has been called "the largest security breach in cryptocurrency history."

The entire community is in a state of confusion, and it seems that no one has a full understanding of the situation. However, Safe.eth, Bybit's Ethereum cold storage multisig wallet, has denied any breach on their side.

"The Safe security team is working closely with Bybit in the ongoing investigation. We have not found evidence of a breach of the official Safe interface. However, out of an abundance of caution, Safe {Wallet} has temporarily disabled some functionalities. User security is our top priority, and we will provide further updates soon," the company stated.

Essentially, Safe uses a smart contract-based wallet system to manage its Ethereum cold storage. If the interface was not compromised, this means that the authorized Bybit users must have signed off on the mechanism that allowed the hack to occur.

If the attackers managed to trick the Bybit authorities into signing a vulnerability, they could rewrite the code and start withdrawing funds.

"The Bybit signers were infected with malware on their endpoints. They are trying to make legitimate transactions, but the malware is acting as a man-in-the-middle attack, they have connected their hardware wallets to sign," security firm Cyvers told BeInCrypto.

With the possibility of Bybit employees being a weak point in this hack, this only adds to the chaos. CZ, the former CEO of Binance, has called for Bybit to halt all withdrawal transactions, but this has not happened.

Zhou assured users that the exchange has sufficient funds to maintain solvency, and Arkham Intelligence has identified a transaction that proves at least $500 million in reserves. Zhou even stated that Bybit will borrow to ensure all withdrawal requests are fulfilled.

"Not an easy situation to handle. Suggesting a temporary pause on all withdrawal transactions as a standard security precaution may be prudent. Will provide any support if needed. Good luck," CZ wrote on X (formerly Twitter).

Pi Network turns bullish after Bybit's troubles

While there is no definitive evidence, some in the cryptocurrency community believe that Pi Network enthusiasts may have been involved.

Pi Network's Mainnet launched yesterday with the largest Airdrop in cryptocurrency history. While some exchanges listed the token from day one, Ben Zhou firmly dismissed it as a scam yesterday. Bybit has consistently refused to list this token.

As a result, there has been an unusually positive reaction in the PI market following the Bybit hack. The token price has risen nearly 10%.

In summary, everything is in a state of chaos. In the latest live stream, Zhou discussed some next steps for Bybit following the hack. He stated that withdrawals remain open, but traffic is 100 times higher than normal, so users may not be able to access the service smoothly.

"We have been experiencing large withdrawal waves since the $1.4 billion ETH hack. Even as we are going through a mass withdrawal, this is not an issue. We have sufficient tokens to serve our customers," Zhou said.

The company will not attempt to immediately buy back the lost assets, but will rely on bridge loans, but remains adamant that they can keep their users protected.