Chainflip, a leading cross-chain decentralized exchange (DEX), has announced a critical protocol upgrade aimed at stopping the Bybit hackers from funneling stolen assets through its platform. The move comes in response to the $1.4 billion Bybit hack, where over 400,000 Ether (ETH) was stolen, putting cross-chain protocols like Chainflip at risk of being exploited for illicit fund transfers.
The development team plans to deploy the “1.7.10” upgrade, introducing advanced screening tools that empower broker operators, including SwapKit and Rango, to reject deposits of ETH and ERC-20 tokens linked to suspicious activities. This will allow Chainflip to block compromised funds before they enter the platform’s liquidity pools, safeguarding both users and liquidity providers from exposure to high-risk assets.
In their official announcement, Chainflip Labs emphasized the unified stance within their ecosystem against illicit fund flows, stating,
“After discussions amongst the team, community, liquidity providers on the network, all the major interfaces using Chainflip, and a majority of validator providers, we’re moving ahead with a plan to enable interfaces to robustly block illicit flows in the Chainflip protocol.“
The upgrade isn’t just about stopping this single incident—it’s about strengthening the platform in the long run. By shielding the protocol from illicit flows, Chainflip aims to improve its liquidity depth and pricing over time, making it a more competitive player in the DeFi space.
As of the announcement, most of the code for the 1.7.10 upgrade was already written, with final testing and deployment underway. The upgrade is expected to go live within 24 to 72 hours, reinforcing Chainflip’s proactive stance on security and user protection in the face of growing threats.
Collaborative Efforts Across the Crypto Ecosystem
On February 21, Bybit, one of the world’s largest centralized cryptocurrency exchanges, suffered a staggering $1.4 billion exploit—marking the largest hack in crypto history to date. The attackers managed to siphon off a significant portion of Bybit’s Ether (ETH) reserves by exploiting vulnerabilities in the platform’s multi-signature approval process.
The hackers ingeniously manipulated a standard multi-sig procedure, deploying a fake user interface (UI) to mask a malicious smart contract. This deception allowed them to bypass security protocols and execute the massive heist undetected. Following intense on-chain investigations, several blockchain analysts confirmed that the North Korea-backed Lazarus Group was behind the attack
The laundering of the stolen assets began almost immediately. Blockchain analytics firm EmberCN revealed that within just two and a half days, the attackers had laundered around 89,500 ETH—worth approximately $221.5 million—representing about 18% of the total stolen amount. This rapid movement of funds raised alarms across the crypto industry, triggering heightened vigilance among exchanges and DeFi platforms.
The hack prompted a unified response from various stakeholders within the cryptocurrency community. Chainflip has been actively collaborating with other platforms, including THORChain and Rango Exchange, to ensure that the stolen funds are not funneled through their networks.
On February 22, the platform detected suspicious activity linked to the Bybit hackers, who attempted to swap USDC using Chainflip’s protocol. In response, Chainflip immediately put its front-end swapping platform into maintenance mode, effectively disabling swaps and preventing further laundering through its network.
Quick Facts:
- Chainflip is deploying the “1.7.10” upgrade to block Bybit hackers from using its platform.
- The Bybit hack resulted in the theft of over 400,000 ETH, valued at approximately $1.4 billion.
- Collaborative efforts are underway among multiple crypto platforms to prevent the laundering of stolen funds.
- Enhanced security measures in cross-chain protocols are essential to protect against similar exploits in the future.
