Original author: Kane Wang, CTO of Safeheron
Bybit Event Overview
On February 21, 2025 at 22:13 (Singapore time), the Bybit team used the multi-signature process of Safe Wallet to initiate a transfer from a cold wallet to a warm wallet. CEO Ben verified the target address through Safe Wallet, but when he finally used Ledger for confirmation, because Ledger only displayed the contract interaction parameters and failed to display the complete transaction information, the attacker took advantage of the opportunity and successfully stole nearly $1.5 billion in assets.
On February 26, 2025, Sygnia released its findings, confirming that the AWS S3 bucket of Safe Wallet was hacked and deployed with malicious JavaScript code targeting Bybit, the main purpose of which was to effectively change the transaction content during the signing process. At the same time, Safe Wallet stated that the Safe smart contract was not affected.
This incident is similar to the recent attack that cost Radiant Capital $4.5 million, and it has sounded the alarm for the entire digital asset security industry. Kane Wang, CTO of Safeheron (the only open source MPC digital asset self-custody security service provider in Asia), also made an in-depth analysis of this incident:
The fundamental flaw: “What you see ≠ what you sign”
The Bybit incident revealed a fatal flaw in the wallet architecture: there is a huge gap between the transaction intention displayed and the actual operation performed. This problem is common in many wallet systems:
A. Infrastructure compromised
If an attacker hijacks the wallets UI (as in the case of Safe Wallet) or backend, users may unknowingly approve malicious operations disguised as legitimate transactions. Although smart contract-based wallet solutions (such as Safe Wallet) perform well in key sharding, they fail to completely solve the problem of transaction integrity verification.
B. Ecosystem compatibility issues
The Bybit incident exposed a critical flaw in ecosystem compatibility: even with secure devices such as Ledger, the lack of seamless integration between different systems can still lead to security compromises. In this attack:
Safes UI was tampered with: the attacker manipulated the displayed target address to make it look legitimate.
Ledgers offline verification failed: As the last line of defense, Ledger failed to effectively implement the what you see is what you sign verification mechanism. Due to its poor UI compatibility with Safe, Ledger only displayed contract interaction parameters, but did not display transaction information in a friendly manner, resulting in key transaction details not being verified.
The original intention of using Ledger and Safe together was to ensure safer use of funds and achieve a cold + warm combination, but we found that its lack of integrated security defense-in-depth design exposed multiple unexpected security blind spots.
This incident highlights the need for institutional-grade wallets to have more advanced security measures to ensure the authenticity of transactions and protect against sophisticated attacks in high-risk environments. It is particularly important to adopt multi-layered security solutions to cope with increasingly sophisticated attack methods.
How can enterprises build an encrypted security fortress
1. Multi-device signing:
When signing a transaction, different signatories should use different hardware devices to avoid the same device being used for all signature operations and reduce the risk of a single point of failure.
2. Risk exposure focus and systemic protection:
Security infrastructure service providers and exchanges should systematically understand risk exposure and reduce risk exposure points. In the Ledger+Safe combination, if the Safe official UI is maliciously tampered with or hijacked, the risk exposure will be further expanded. When choosing a solution, exchanges need to clarify which links may have security issues and strengthen construction for key risk exposures. For example:
Security infrastructure service providers can focus risk exposure on apps and ensure that they have independent what you see is what you sign capabilities and TEE (trusted execution environment) verification. Even if the server is hacked, customer assets can still remain safe. In other words, even if the suppliers internal personnel do evil or are hacked, the wallet app is normal and the supplier cannot steal user keys or transfer customer assets.
In addition, service providers should also implement DevSecOps principles, further ensure the security of the system through a secure App construction environment and strict approval and verification processes. Reducing risk exposure and implementing DevSecOps are also what Safeheron always insists on.
When using a cold wallet solution, the cold wallet, as a risk exposure, can have friendly what you see is what you sign capabilities, whitelist capabilities, effective updates of wallet firmware, etc. to effectively ensure the safe use of the wallet.
3. Decentralized fund management:
Large amounts of funds are concentrated in a single wallet, which faces high risks. Once security is lost, the whole army may be wiped out at once. Therefore, we can set up hot wallets, warm wallets and cold wallets according to the frequency of fund dispatch to perform hierarchical management. When using cold wallets, you can also further subdivide the use of funds, that is, there can be a reasonable stratification in fund management to achieve effective fund isolation.
If Bybit had placed the $1.5 billion worth of ETH in wallets with different usage frequencies, at least the hacker would not have been able to win in one move and lose so much money. It might even have survived because the hacker might have targeted other big fish.
Institutional wallet security: architecture determines survival
The security construction of institutional asset management requires continuous investment. We predict that the future trend of digital asset management will be that hot wallets will adopt MPC-TSS multi-signature management, warm wallets will combine multi-signature and risk control strategies to achieve refined operations, and cold wallets will adopt institutional-level solutions to achieve true offline WYSIWYG, continuously building a multi-layer protection system for the security of user and institutional assets.
About Safeheron
Safeheron is a digital asset security custody solution provider based on MPC+TEE. It is also the worlds first and Asias only company to open source the C++ MPC threshold signature protocol library.
