Today in crypto: AI bots targeted as Bybit deals with $1.4B theft

Bybit breach details and response

Bybit has confirmed a security breach resulting in the theft of approximately $1.4 billion in digital assets, primarily Ethereum. The February 21 incident is believed to be the largest crypto hack in history.

Co-founder and CEO Ben Zhou stated in a live stream that the exchange is handling massive withdrawal requests but expects to clear the backlog within hours without suspending withdrawals. Zhou assured users that the stolen amount represents only about 1/20th of Bybit’s total assets, which the exchange can cover independently if recovery fails. To limit market impact, Bybit is seeking a bridge loan rather than buying replacement Ethereum directly.

Security experts are investigating how hackers bypassed cold storage and multi-signature protocols. A leading theory suggests attackers may have compromised authorized signers’ devices. Safe, the company behind Bybit’s wallet system, has found no evidence of a breach but has restricted certain functionalities as a precaution.

Trading data from CoinGecko showed Bybit’s spot trading volume surged 46% to more than $8 billion in 24 hours, reflecting market volatility after the attack.

AI trading bots targeted in sophisticated scam

Security experts have uncovered a new scam targeting AI-driven trading bots. CertiK’s Chief Security Officer Kang Li explained that scammers design smart contracts with hidden backdoors that appear safe to AI systems. Once the bots invest, scammers execute a rug pull, stealing the funds. Estimated losses could reach tens of millions of dollars.

Bitlayer founder Charlie Hu noted that while anti-sniping measures may help, they often introduce new vulnerabilities. The decentralized nature of crypto trading makes prevention and prosecution difficult.

 

SEC drops cases against OpenSea and Coinbase

The SEC has closed its investigation into OpenSea, with CEO Devin Finzer confirming no enforcement action will be taken. The probe began in August 2024 over potential unregistered securities violations.

The SEC also plans to dismiss its lawsuit against Coinbase, which had accused the exchange of operating an unregistered securities platform. Chief Legal Officer Paul Grewal cited shifts in SEC leadership under the Trump administration as a key factor.

Following the announcements, NFT marketplaces have shown early signs of recovery. Magic Eden’s Chief Business Officer Chris Akhavan called the decision beneficial for the ecosystem. Despite these victories, the SEC continues to scrutinize DeFi and stablecoins.

Ray token drops 22% amid AMM competition fears

Ray, the native token of Radium DEX, fell 22% to $3.28 amid speculation that Pump.fun—a Solana-based memecoin launchpad—may launch its own automated market-making (AMM) system.

Currently, projects pay six SOL (around $950) to migrate tokens from Pump.fun to Radium’s more liquid pools, which charge a 0.25% trading fee. Only 1.4% of tokens progress to Radium’s pools, but those that do have provided a revenue stream. Pump.fun’s AMM could reduce Radium’s future swap volumes, impacting fees.

Pump.fun’s platform hints at competitive fees aimed at challenging Radium. Despite processing $5.3 million in daily fees at its peak, recent trading volume dropped 27% to $134 million. Neither platform has commented.

Crypto market movers: Sonic gains 8.5% as DeFi and gaming tokens slide

Sonic, formerly FTM, gained 8.5% to $0.88, with $347 million in trading volume, signaling optimism around its rebranding.

DeFi tokens fell sharply: Radium dropped 28.3% to $3.15, while Gala and Story fell 8.3% and 10.6%, respectively. Layer-1 tokens Avalanche and Arbitrum declined 7.2% and 7.4%. Meme tokens Pepe and Bonk lost 6.9% and 7.1%.

High trading volumes suggest active price discovery rather than panic selling, with investors favoring more established assets.