Daily Update:

• Bybit exchange was hacked on Friday 21 Feb, resulting in the theft of $1.46 billion worth of Ether and Ether staking derivatives. We covered how the hack occurred, and highlighted on-chain data displaying how the hackers have so far moved the illicit funds here. 
• Since then, the attackers (alleged to be the Lazarus Group), have bridged some of the Ether to the Solana blockchain. From there, the funds were bridged to the Binance Smart Chain (BSC) and moved across several wallets before eventually being bridged back to Solana. One wallet connected with the attackers transferred 60 SOL to another wallet address, which launched a token on Pump.fun named after the First Emperor of China — Qin Shi Huang, minting 500,000 tokens. The token reached trading volumes upwards of $26M within hours of the launch. The splitting of the funds across various chains and increasing transaction volume is another method being used by the attackers to launder the funds and make tracking their movements more difficult. 
• Following the hack, Bybit have announced that they have re-collateralised all lost client assets, “back to 100% 1:1”, and will provide a proof of reserves through a merkle tree. These missing funds have been replaced through ETH purchases, loans and whale funding.

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• BTC has exhibited lackluster spot activity over the weekend, and its ATM implied volatility term structure remains steep. In contrast, ETH's spot fell around 8% following the news of the hack, before paring back its losses, with its term structure briefly inverting before leveling off. Additionally, ETH's perpetual funding rates are negative. 

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• The SEC has agreed to drop its lawsuit against Coinbase according to a statement made by the company. The case began in June 2023 where the SEC accused Coinbase of operating an illegal exchange as many of the tokens available on the platform could be considered securities. This follows after a similar case against Binance was put on hold. 

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• Friedrich Merz is set to become the next Chancellor of Germany. His conservative Christian Democrat party, CDU / CSU, won 28.6% of the vote in Germany’s federal elections, defeating incumbent Olaf Scholtz’s Social Democrat party. The far right, AfD came second in the election.
• Just like the current chancellor Scholz, Merz will require a coalition government, stating he wants to achieve this goal within two months. 
• The euro has rallied on the news (up 0.6% against the dollar) as Merz looks to form a government as soon as possible, and is expected to increase fiscal spending to revive Germany’s economy. 

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• Google continues to assess the integration of web2 and web3 technologies on their platform including advanced encryption technologies like zero-knowledge proofs (ZKP) for increased security. At the Bitcoin Tech Carnival in Hong Kong, it was announced that they are exploring Google account sign-in options for Bitcoin wallets.

This Week’s Calendar:

Charts Of The Day: