Recently, in an extraordinary display of industry solidarity, crypto exchange Bitget came to the rescue of rival crypto exchange platform, Bybit. Bitget transferred approximately $106 million in Ether (ETH) to shore-up Bybit’s reserves after a devastating security breach the crypto exchange suffered in late February.
Bybit’s CEO, Ben Zhou, confirmed that the company had borrowed 40,000 ETH from Bitget to replenish its reserves and reassure customers after the hack. This unprecedented move sent waves through the crypto community, highlighting the growing maturity and cooperation within the industry.
Apart from Bitget, a MEXC hot wallet transferred 12,652 stETH ($33.75M) to Bybit’s cold wallet in February. Also, to aid Bybit customer withdrawals, a whale or institutional entity transferred 11,800 ETH (≈$31M) from Binance to Bybit’s cold wallet.
The Bybit Hack and How the Crypto Industry Avoided a Contagion
Bybit suffered a significant hack in February, resulting in substantial asset losses. After the news of the hack was broken, Bybit experienced record withdrawal volumes of over 350,000 requests and nearly 99.994% completed. Only about 2,100 were pending.
Fearing contagion and a potential loss of confidence in the broader market, Bitget’s management sprang into action, temporarily lending support to Bybit by transferring approximately $100 million in ETH to Bybit’s wallets. This transaction occurred on 21 February 2025, when Bitget sent 40,000 ETH, worth around $106 million, to a Bybit cold wallet.
Eventually, Bitget’s transfer was later reversed after Bybit successfully raised funds to cover the loss. Bybit later repaid the loan 25 February 2025, three days after receiving the support.
This extraordinary gesture was hailed as a game-changer in the crypto space, where rival exchanges typically prioritize competition over cooperation. Bybit was able to continue operating without solvency issues, thanks to Bitget’s timely intervention.
The incident also highlights the importance of Proof of Reserves (PoR), a metric that demonstrates an exchange’s solvency and transparency. Bitget’s PoR, for example, has consistently exceeded 130% throughout the quarter, showcasing the exchange’s strong financial foundation.
As the crypto sector continues to evolve, such cooperative behavior could become more prevalent, mirroring the way traditional banks sometimes work together during financial crises. This development has significant implications for the future of crypto, potentially paving the way for increased stability, trust, and mainstream adoption.
Tochy Emerole, Marketing Lead, Quidax, believes this is the way to go for the crypto industry, rather than a ‘dog eat dog’ mindset in crypto business. According to her, “I was in awe when I read this news and was truly impressed by Bitget’s gesture. From a marketing and analytical standpoint, this incident underscores the importance of collaboration over competition in the crypto industry.”
Emphasizing how such collaboration reinforces trust in the ecosystem, Emerole observed that “such solidarity not only reinforces trust among stakeholders but also strengthens the industry’s resilience against external threats. It also helps create trust for even investors as this shows that the ecosystem is now prioritizing economic sustainability and symbiotic relationships as against a typical ‘dog eat dog’ system.”
Read also: Crypto market plunges as Bybit suffers $1.4 billion hack.
Factors that Triggered Bitget’s Support
Several factors could have contributed to Bitget’s decision to provide financial support to Bybit:
- Industry reputation: By supporting Bybit, Bitget may have aimed to maintain the overall reputation of the crypto industry, demonstrating that major players can work together to address challenges.
- Partnership and cooperation: The two companies may have existing partnerships or agreements that facilitated this transaction, highlighting the importance of collaboration in the industry.
- Market stability: Bybit’s security breach could have had a ripple effect on the broader market, and Bitget’s support may have helped to mitigate this impact and maintain market stability.
Reasons Bitget Could Have Decided Not to Send Support
The financial support Bitget gave to Bybit should not be underestimated, particularly between competitors. Despite the potential benefits of supporting Bybit, Bitget could have decided not to send the financial support under several circumstances:
- Competitive advantage: Bitget may have seen Bybit’s security breach as an opportunity to gain a competitive advantage, choosing not to provide support and potentially attracting Bybit’s customers.
- Risk assessment: Bitget may have assessed the risks associated with providing support to Bybit as too high, potentially due to concerns about Bybit’s financial stability or the likelihood of repayment.
- Transparency: There was no suspicion of misappropriation, mismanagement, or any foul play whatsoever against Bybit. Bybit’s CEO, Ben Zhou, disclosed the security breach publicly as soon as it was discovered. In the face of the crisis, Zhou was widely commended for his transparency and the speed at which Bybit implemented post-breach measures, including maintaining communication with both customers and the general community. Notably, at the verge of FTX collapse, Binance was considering acquiring the troubled crypto exchange as a way to save it, its users, and the crypto industry but Binance eventually called it off after CZ expressed suspicions over FTX’s finances and operations, particularly the FTX Token. This implies that a lack of transparency can be a serious blocker to collaboration.
Clearly, Bitget’s move is a significant step towards establishing a more resilient and collaborative crypto ecosystem. It is a remarkable demonstration of how crypto operators can put aside competition and choose to collaborate to address common threats faced by operators in the industry.
From a cybersecurity and compliance point of view, Chioma Onyekelu, a compliance professional and Blockchain Forensics Specialist at A&D Forensics, emphasized the importance of collaboration amongst crypto operators in a cyber-attack scenario. “As a crypto investigator and compliance officer, I see collaboration among industry players crucial especially when one platform’s breach can ripple across the entire ecosystem and lead to systemic crises”, she said.
“Cyber attack is a shared threat and can happen to anyone”, continued Onyekelu; “Hence, the recent move by Bitget to support Bybit with $106 million after a major hack is a reminder that shared threats require shared responsibility. It’s not just about competition; it’s about preserving user trust, protecting the crypto market, and showing regulators we can self-regulate.”
Onyekelu concluded by pointing out that building a sustainable financial system requires collaboration, not rivalry: “In the crypto ecosystem, we’re not just building platforms, we’re building a parallel financial system. And systems don’t thrive on rivalry; they thrive on resilience, built through collaboration.”
The Traditional Banking Sector as a Precedent for Collaboration
In the traditional banking sector, institutions often come to one another’s aid in times of crisis to prevent contagion and maintain financial stability. This collaboration is typically facilitated by central banks and interbank lending mechanisms. Some notable examples:
- Consortium of Banks supporting Long-Term Capital Management (LTCM): In 1998, a consortium of banks, including Goldman Sachs, Merrill Lynch, and JPMorgan, provided a $3.6 billion bailout to LTCM, a struggling hedge fund, to prevent a potential collapse of the global financial system.
- Interbank Lending: Banks often engage in interbank lending, where they borrow and lend funds to manage liquidity and meet reserve requirements. This helps to maintain stability in the financial system and prevent liquidity crises.
Although crypto exchanges are yet to enjoy government protection as traditional banks typically do, it is perhaps relevant to highlight two major interventions in the global financial history that equally speak to the need for collaboration. Two instances:
- The 2008 Financial Crisis: During the global financial crisis, central banks and governments intervened to support struggling banks, such as Bear Stearns and Lehman Brothers. The U.S. Federal Reserve provided emergency loans and facilitated mergers to prevent a complete collapse of the financial system.
- The Bank of England’s Emergency Funding: In 2008, the Bank of England provided emergency funding to several UK banks, including Royal Bank of Scotland and HBOS, to prevent their collapse and maintain financial stability.
Leading crypto market analyst and founder of CryptoPreacher Academy, Rume Ophi, also shares Emerole’s and Onyekelu’s opinions about Bitget’s collaborative mindset towards Bybit. Emphasizing the need for innovators in Nigeria and across Africa should learn from the collaborative mindset of Bitget in this regard, Ophi said, “The industry needs support like this because it creates a ripple effect across the entire ecosystem. This is an industry founded on the principles of community and liberation from the traditional financial system.”
Ophi believes that it cannot be all about competition all the time, especially at the current stage of the crypto industry. “Competition will only stunt our growth as an emerging sector. Unfortunately, only the true believers in this space understand the significance of the support Bybit received from other exchanges. The new wave of innovators in this industry—especially in Africa and Nigeria, still have much to learn. There is no such thing as ‘our world against theirs’. Adoption cannot thrive with that mindset,” he emphasized.
What this Means for the Future of Crypto
The transaction between Bitget and Bybit serves as a positive example of collaboration in the crypto industry. By working together, major players can help maintain market stability, trust, and reputation. This move demonstrates that even in times of crisis, the industry can come together to support one another, ultimately benefiting the entire ecosystem. The precedent set by the banking sector’s collaborative efforts in times of crisis also highlights the importance of cooperation in maintaining financial stability, and the crypto industry can learn from these examples.
Will Bitget’s gesture to Bybit set a new standard for inter-exchange cooperation? How might this impact the broader crypto market and its reputation? As the industry continues to mature, one thing is clear: collaboration and mutual support will play a crucial role in shaping its future.
Perhaps, another area that crypto exchanges and other crypto operators need to explore collaboration is mass awareness and education on crypto. Such collaboration will not only benefit crypto adoption but also promote and safeguard the sustainable growth of the industry. Clearly, in the best interest of the crypto ecosystem, it is time crypto industry operators became more intentional about collaboration.
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