Bybit’s market share declines sharply after $1.4 billion security breach

Bybit is no longer among the top three centralized exchanges by trading volume after the $1.4 billion Lazarus Group hack led to a massive decline in its market share. According to data from the on-chain analytics platform Kaiko, Bybit’s share of overall trading volume has dropped by more than 50% since the hack.

Per the Kaiko data, Bybit’s market share for all the major centralized exchanges over the last 30 days peaked at 32.04% on February 15, with the exchange having 22.5% of the volume on February 20, just a day before the hack. However, that has now dropped to 9.04% as of March 9, representing approximately a 60% decline over the period.

Exchanges Market Share of Volume for Bitcoin (Source: Kaiko)

The plunge in Bybit is even more pronounced when examining the trading volume of offshore exchanges, i.e., the centralized exchanges that are not based in the US.

In this category, Bybit was second only to Binance in trading volume before the February 21 hack, with an average of over 25% of the trading volume leading up to the incident. That has now dropped to 10.57% by March 9.

Exchanges Market Share (Source: Kaiko)

Interstingly, Bybit’s loss was Binance’s gain. The world’s largest exchange was the biggest beneficiary of the user exodus, as trading activity increased significantly after the Bybit hack. It was clear how Binance’s market share increased significantly.

Before the hack, Binance was responsible for around 50% of the daily trading volume for centralized offshore exchanges. However, that changed significantly after the hack, with its market share average rising above 60%. Binance. The exchange accounted for 70.5% of the trading volume on February 23, 48 hours after the Bybit hack.

Still, other exchanges also saw their market share increase after the incident, even if not at a similar rate to Binance’s. OKX and Coinbase’s share of the trading volume has been relatively higher since the incident.

Bybit showing signs of recovery

Meanwhile, Bybit’s current market share is a sign of a resurgence in trading activity, showing that some of its users are returning. In the days following the hack, the market share was in a free fall, leading to Bybit’s overall share hitting as low as 5.44% on March 2, just as its share of offshore exchange volume also reached its bottom at 6.42%.

This highlights how the exchange’s crisis management enabled it to survive the biggest heist against a financial institution. By choosing not to pause withdrawals during the worst hours of the crisis and keeping users updated, the exchange was able to retain the trust of most in the crypto community.

However, efforts to recover the funds have been quite slow. Despite multi-party efforts involving several security experts, only around 3% of the funds have been frozen so far. According to data from Bybit LazarusBounty page, only $43.71 million has been recovered so far.

The exchange has also kept its word of giving out 10% of every recovered fund as a bounty. So far, it has paid out $4.32 million to several individuals and organizations that have helped freeze funds or provided information that led to the freezing.

Despite this effort, the hackers have been able to convert at least $300 million of the stolen funds, according to data from Elliptic.

Source