22nd February 2025 > > Bybit & Coinbase.

tl;dr

The biggest hack in crypto ever happened just yesterday. Coinbase delivers a hefty body blow against those who wish to diminish our freedom and liberty. Is XRP the next to be freed from the clutches of the SEC?

Market Snap

Market Wrap

So, there we were, nicely heading towards $100k yesterday afternoon, and boom, news broke of the Bybit hack leading to a rapid retracement to $95k. Some have been quick to spot a recent pattern:

Occasional Series – A Central Banker, until he decided to do something far more useful instead (*)

“Long-term interest rates are determined largely by financial markets”. Mario Draghi, President of the ECB 2011-2019.

Draghi promptly then contradicted himself by launching QE in the wake of the Global Financial Crisis which continues today. It is a policy designed to suppress long-term yields on government debt, and to reduce the spread between German bunds and peripheral debt. It was later expanded to include agency debt and corporate bonds. The entire European yield curve is manipulated by the ECB. We expect politicians to lie, but when unelected bureaucrats get in on the act, the technocratic elite are plainly out of control, a situation that is untenable in the long-term.

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(*) He retired, before then returning as the unelected Prime Minister of Italy.

Curious Cryptos’ Commentary – The Bybit hack

Bybit, established in 2018, is not an exchange I would ever use for one very obvious reason. Its speciality is providing leverage through perps, futures, and options, at up to a frankly ridiculous 100x. As with all margined products, there are a small handful of winners (apart from the exchange itself) but the overwhelming majority of individual users are losers.

Yesterday Bybit got hacked losing 520,000 ETH valued at approximately $1.4bn. ZachXBT, an on-chain sleuth, has identified the notorious North Korean Lazarus group as responsible, though details of how the hack occurred remain mired in confusion. The ETH was transferred out of a multisig cold wallet after its underlying contract code had been altered to allow for unauthorised transactions. The alteration to the code occurred when members of the Bybit security team approved some malicious transactions that had been presented to them using a fake interface that had somehow been downloaded into their systems. It is clear that this was a highly sophisticated attack. The very portly, and deeply unpleasant, Kim Jong-Un is tucking into yet more caviar, foie gras, and whiskey at this very moment in celebration as many of his fellow countrymen continue to starve.

This is obviously quite a large amount of money, but the exchange itself is at no risk of blowing up, whilst Binance amongst others have made bridging loans to stave off a full-scale bank run.

This is not an FTX situation, and indeed the broader crypto market is holding up well in the circumstances. Normal service will be resumed shortly.

Curious Cryptos’ Commentary – Coinbase

This is a big win for the crypto industry. It is expected that very soon the SEC will drop its court action against Coinbase for running an unregistered securities exchange:

https://www.coinbase.com/en-gb/blog/righting-a-major-wrong

In this press release, though he wasn’t named, Gensler is the target of Coinbase’s ire:

“Coinbase went public in April 2021. As part of that process, the SEC reviewed our business model and S1 disclosures and allowed us to go public. Two years later, they sued us. That’s despite absolutely nothing changing in our business model. 

What changed over those two years was the political leadership at the SEC. In its war against crypto it acted as if it was above the law, usurping the power of Congress as set forth in the Constitution. And after millions in legal costs and fees, countless employee hours, and years of protracted litigation, we have successfully protected our customers’ rights, and held the SEC accountable.”

It is useful to recall that the reason Coinbase was unregistered was because the SEC refused to register anyone, except for the fake registration of Prometheum. Prometheum was a company that never intended to launch crypto services, but was a tool for Gensler to claim he had a working registration process.

There is now growing expectation the other most high-profile SEC action against the crypto industry in the form of its baseless claims against Ripple Labs Inc. will also be dropped, opening the door to a spot XRP ETF which can only be good for the price of XRP.