How North Korea Pulled Off a $1.5 Billion Cryptocurrency Heist and Why Cold Wallets Didn’t Stop It
In February 2025, North Korean hackers executed one of the largest cryptocurrency thefts in history, stealing approximately $1.5 billion from the Dubai-based exchange Bybit. The attack, attributed to the infamous Lazarus Group, sent shockwaves through the crypto industry, raising urgent concerns about digital asset security.
This incident also shattered the belief that cold wallets—previously considered the gold standard for protecting crypto—are completely secure. In this article, we’ll break down how this attack happened, the difference between hot and cold wallets, and why even the most secure storage methods weren’t enough to stop this breach.
How Did North Korea Steal $1.5 Billion in Crypto?
The FBI confirmed that North Korean hackers successfully breached Bybit’s security and transferred Ethereum-based assets to an unknown address. While the exact details of the attack remain undisclosed, cybersecurity analysts speculate that the hackers likely exploited a combination of human error, social engineering and insider threats to gain access to supposedly secure wallets.
Hot Wallets vs. Cold Wallets: What’s the Difference?
To understand how this attack happened, it’s important to break down the differences between hot and cold wallets and their respective vulnerabilities.
Hot Wallets – Convenient but Risky
Hot wallets are digital wallets connected to the internet. They allow for quick transactions and easy accessibility but are more vulnerable to hacks.
Pros:
- Instant access for trading and transactions
- Convenient for frequent crypto use
Cons:
- Higher risk of cyberattacks, phishing and malware
- Always online, making them easier targets
Cold Wallets – Secure but Not Impenetrable
Cold wallets store cryptocurrency offline, disconnected from the internet. They are considered the safest option for long-term storage.
Pros:
- Immune to online attacks, phishing and malware
- Provides strong security for long-term holdings
Cons:
- Can still be compromised if private keys are stolen
- Vulnerable to insider threats and physical theft
- More difficult to access for quick transactions
How Did Hackers Bypass the Stronger Cold Wallet Security?
The Bybit attack proves that cold wallets are not invincible when human factors or operational weaknesses come into play.
Here’s how hackers can still compromise them:
- Social Engineering Attacks – If an employee with access to cold storage falls victim to phishing or bribery, hackers can steal private keys or gain entry.
- Insider Threats – Employees or contractors with inside knowledge can deliberately or accidentally expose secure assets.
- Poor Key Management – If private keys are stored in easily accessible locations or shared insecurely, they can be stolen.
- Compromised Multi-Signature Protocols – If multiple security signers are hacked or coerced, even multi-signature wallets can be drained.
- Bridge Exploits – If Bybit was using crypto bridges to move assets between blockchains, vulnerabilities in those bridges could have been exploited to siphon funds.
- Physical Security Breaches – If cold wallets are stored in insecure locations, attackers can physically steal and extract the assets.
These factors show why a layered security approach—not just cold wallets—is essential for crypto security.
How Businesses and Investors Can Protect Their Crypto
With North Korean hackers continuing to target crypto exchanges, businesses and individual investors must strengthen their security measures. Here’s how:
- Use Multi-Signature Wallets: Require multiple approvals for transactions to prevent single points of failure.
- Implement Air-Gapped Security: Store cold wallets in offline environments with no digital access.
- Strict Access Controls: Limit employee access to private keys and enforce strong authentication measures.
- Regular Security Audits: Conduct frequent security reviews to identify potential weaknesses.
- Diversify Storage: Use a combination of hot and cold wallets to balance security and accessibility.
Heed the Warning
North Korea’s latest crypto heist is a wake-up call for the entire industry. While cold wallets remain one of the best ways to secure digital assets, they are not invincible. Human error, insider threats and advanced hacking techniques can still lead to catastrophic losses.
For businesses and investors, the key takeaway is clear: Crypto security must go beyond just hardware wallets. A multi-layered defense strategy, strict access controls, and continuous security audits are essential to stay ahead of cyber threats.