Cryptocurrency exchange Bybit has formally requested that Paraswap DAO return 44.67 ETH (approximately $114,000) in transaction fees collected when the platform’s $1.4 billion hacker used the DEX to swap stolen funds. According to Bybit’s proposal, the fees were generated when North Korea’s Lazarus Group swapped stolen stETH for ETH using Paraswap. The transaction was carried out in eight separate transactions following the February 21 attack. These funds were automatically collected as standard protocol fees and later wrapped into wETH.
The Paraswap proposal sheds light on new technical insights regarding how the February 21 Bybit hack was carried out. Bybit specifically emphasized how the stolen funds were laundered through decentralized exchanges. The transaction consisted of eight individual Ethereum transaction hashes where the hacker traded stolen stETH for ETH on Paraswap. Zhou reported that the hackers used THORChain to swap ETH for BTC, with 361,255 ETH (or approximately $900 million) being moved through this cross-chain protocol.
The Bybit proposal has sparked a governance discussion among the Paraswap community. Members have begun to express opposing opinions on whether refunding the fees aligns with fundamental DeFi philosophy. Some argue in favor of refunding the money in the context of a hack, citing moral reasons, while others are concerned about the precedent it sets for protocol self-governance.
Community stakeholders have raised questions about how similar incidents will be addressed in the future and called for a standardized policy rather than handling each case individually. Some have also requested proof that the proposal was indeed made by Bybit. Paraswap has been lauded as one of the top players in assisting Bybit freeze compromised funds, with a successful bounty program in place.
The next few days are crucial for fund recovery efforts, as the funds are set to clear at exchanges, OTC, and P2P platforms. Bybit’s proposal to Paraswap outlines specific goals and means for the return of requested funds, including immediate freezing and transfer to a recovery wallet upon approval. The exchange has addressed the community’s verification concerns by ensuring that communication on the matter will be shared through official channels.
As the saga unfolds, the Paraswap community awaits further developments and decisions regarding the return of transaction fees in light of the Bybit hack. The debate over precedent, DeFi principles, and ethical considerations continues to shape the conversation among stakeholders as they navigate the aftermath of the high-profile security breach.