ROLLUP: Bearish Macro Report | Biggest Hack In History | SEC Drops Crypto Cases | Where To From Here?
The final week of February has been anything but quiet for the crypto world. Markets are down, regulatory winds are shifting, and one of the largest hacks in history has just rocked the space. Let’s break down the biggest stories of the week.
Markets Take a Hit: Macro Headwinds and Crypto-Specific Woes
Crypto markets saw another rough week, driven by a mix of macroeconomic factors and industry-specific shocks.
1. U.S. Tariffs Shake Global Trade
Former President Trump confirmed that 25% tariffs on all Canadian and Mexican imports, as well as a 10% levy on Canadian energy resources, will go into effect on March 4. Additionally, 25% tariffs on the European Union are reportedly coming soon. These moves are set to impact major U.S. states like Texas, California, and Montana, which have deep trade ties with Canada and Mexico. The ripple effect? Increased costs, economic uncertainty, and a further strain on investor sentiment.
2. Consumer Sentiment Plummets
The University of Michigan’s consumer sentiment index fell to its lowest level in over a year, indicating rising concerns about inflation and economic stability. This, combined with bearish macro trends, contributed to a broader risk-off environment, hitting crypto assets hard.
3. Crypto-Specific Sell-Offs
• Bitcoin ETFs saw a record-breaking $938M in net outflows across all 11 funds, marking the sixth straight day of outflows.
• Ethereum ETFs also had their worst week yet, with $78M in daily net outflows.
• Bitcoin fell to $87K, Ethereum dropped to $2.3K, and Solana took a 15% hit down to $137.
Bybit Suffers the Largest Crypto Hack Ever
One of the biggest stories of the week was the historic security breach at Bybit, which resulted in a $1.5 billion loss.
• The hack was discovered by on-chain analyst ZachXBT and later confirmed by Bybit CEO Ben Zhou.
• The attackers exploited Bybit’s security infrastructure by gaining access to its user interface and replacing its multisig wallet contract with a malicious version.
• Funds were siphoned through a phishing attack on Bybit’s cold wallet signers, followed by a sophisticated manipulation of Safe Wallet infrastructure.
Who’s Behind It?
On-chain evidence points to North Korea’s Lazarus Group, a state-backed hacking collective known for using crypto exploits to finance the country’s regime. Bybit’s stolen funds have already made Lazarus one of the largest ETH holders, surpassing even Vitalik Buterin.
Can the Funds Be Recovered?
So far, around $43M has been frozen or recovered with the help of Mantle, SEAL, and mETH teams. Bybit has also launched a bounty program offering 10% of the stolen funds ($140M) to those who assist in recovering them. Meanwhile, Bybit has taken out bridge loans and secured whale deposits to replace the stolen assets, ensuring users remain whole.
Regulatory Shifts: The SEC is Backing Off
In a surprising turn, the SEC has dropped cases against Coinbase, OpenSea, and Uniswap, signaling a potential de-escalation in its aggressive crackdown on crypto.
• Coinbase: The lawsuit accusing the company of operating as an unregistered securities broker has been dismissed, pending final SEC commissioner approval.
• OpenSea: CEO Devin Finzer called the SEC’s decision to close its investigation a win for the entire Web3 space.
• Uniswap: The SEC abandoned its probe into Uniswap Labs, which had been under scrutiny for allegedly operating as an unregistered exchange.
This regulatory retreat marks a significant victory for the crypto industry, reducing uncertainty for major players and reinforcing the argument that crypto projects should not be classified as traditional securities.
Looking Ahead
The week has been a rollercoaster, with significant market downturns, a historic hack, and regulatory reversals all colliding. Here’s what’s next:
• More clarity on the Bybit hack—will the Lazarus Group manage to offload its stolen ETH, or will more funds be recovered?
• Further SEC developments—is this the beginning of a larger regulatory shift, or just a temporary reprieve?
Despite the turbulence, the long-term trajectory of crypto remains intact. As the dust settles, the industry will continue to adapt and innovate in the face of new challenges. Stay tuned.