- Ethereum cannot reverse Bybit’s $1.4B hack as transactions followed all protocol rules.
- Past rollbacks succeeded due to frozen funds, but modern hacks move assets instantly.
- Stolen ETH is being laundered through mixers, making recovery efforts nearly impossible.
An Ethereum developer explained why the network cannot reverse transactions to recover Bybit’s stolen $1.4 billion. He compared the situation to two historical blockchain rollbacks that were possible under different conditions.
Why Bitcoin’s 2010 Rollback Was Successful
In 2010, Bitcoin successfully reversed transactions after a bug created 184 billion BTC. The network was still small, and the error clearly violated its protocol. The rollback was easy to coordinate, as only a few nodes were active. Since Bitcoin’s developers quickly identified the issue, they could implement a fix before the fraudulent coins spread.
Ethereum developer Tim Beiko highlighted that this rollback was possible because the mistake was obvious. The bug generated an uncountable number of coins that clearly broke the system protocols. The Bitcoin community initiated quick action to safeguard the ecosystem from potential long-term harm. The scale and complexity of current networks have rendered impossible the conduct of such reversals.
The DAO Hack and Ethereum’s 2016 Rollback
Ethereum also reversed transactions in 2016 after The DAO hack, but this case had key differences. An attacker placed funds into a smart contract that enforced a 30-day wait period before releasing funds for withdrawal. The attack on the DAO cryptocurrency provided Ethereum’s community with time to conduct a hard fork. This established Ethereum Classic as an independent network.
The operation succeeded because frozen funds enabled developers and users to establish a workable solution. The rollback approach faced criticism because it threatened Ethereum’s decentralized nature. Users who did not approve of the rollback chose to maintain the original Ethereum chain and they created Ethereum Classic.
Beiko pointed out that this case was unique because the stolen funds were isolated. The Ethereum community had time to debate and implement a response. However, most modern hacks involve instant fund transfers, making such rollbacks impractical.
Why Ethereum Cannot Reverse the Bybit Hack
Beiko explained that the Bybit hack presents different challenges. The theft involved a compromised multisig wallet, where attackers tricked signers into approving fraudulent transactions. From Ethereum’s perspective, these transactions followed all protocol rules. Since they were valid under the network’s logic, there is no technical basis to reverse them.
In contrast to past cases, the stolen funds were not locked in a single contract. Instead, they were immediately moved across multiple protocols. This made recovery efforts much more difficult. Beiko noted that Ethereum’s ecosystem has evolved significantly, making rollbacks disruptive and nearly impossible.
Why Modern Rollbacks Are Risky
Beiko warned that reversing transactions today could destabilize the crypto ecosystem. The stolen funds were quickly moved through decentralized exchanges, lending platforms, and cross-chain bridges. Any rollback attempt would disrupt these protocols, affecting legitimate transactions and settlements.
Ethereum can theoretically implement irregular state changes when funds are frozen and isolated. However, the last attempt to do so in 2018 faced strong opposition. That proposal aimed to recover 500,000 frozen ETH from a Parity wallet bug but was ultimately rejected. Critics argued that such actions could set a dangerous precedent, undermining Ethereum’s decentralization.
Security experts have also highlighted new complications. Crypto mixer platform eXch rejected Bybit’s request for help in tracking the stolen funds. This means the hackers can continue laundering their ETH, making recovery even harder.
Hackers Are Already Moving the Stolen Funds
SlowMist, a blockchain security firm, announced the stolen ETH has begun being washed through laundering schemes. The stolen ETH now flows into different cryptocurrencies including Bitcoin and Monero and other digital assets. This tactic makes tracking and recovering the funds significantly more difficult.
SlowMist’s founder also warned that eXch has a history of refusing cooperation with security researchers. He advised exchanges to strengthen risk controls on funds originating from the platform. The rapid movement of stolen assets through mixers highlights why rollbacks are no longer viable for major hacks in today’s crypto landscape.
