How to Handle a Flaming Dumpster Fire: ByBit vs. FTX

The $1.5 billion hack of ByBit in early 2025 and the spectacular collapse of FTX in late 2022 are brilliant examples of the kinds of disasters one might experience during their crypto journey. Ideally you won’t be a participant of the disaster; instead just viewing them from a safe distance. While both of these disasters had big implications and caused the entire crypto community to go “Wow! That’s bad”, they’re both very different.

One was a brutal, externally inflicted wound; the other was a self imposed fuck up of staggering proportions. While each of these incidents share a few of the same tropes: bad guys, evil overlords, CEO’s desperately trying to stay afloat - overall, on the Ven diagram of crypto disasters, these two incidents actually don’t overlap too much. That’s because the parties involved handled each dumpster fire very, very differently. And how each company handled their own blaze teaches us some valuable lessons, and shines a spotlight on crypto’s most delicate virtue.

First there was the ByBit hack, a nightmare that began with a routine transaction. CEO Ben Zhou, signing off on what appeared to be a standard transfer, unknowingly approved the largest crypto heist in history. North Korea’s Lazarus Group, a state-sponsored hacking group, had infiltrated the exchange’s security protocols, exploiting a vulnerability in third-party wallet software. The result was a stupid amount of money, $1.5 billion to be exact, vanishing in minutes. Presumably, so did Ben Zhou - either to be sick somewhere or to change his trousers, your guess is as good as anyone’s. 

Yet, unlike so many crypto catastrophes, this one didn’t spark a total meltdown. ByBit had a really, really big fire to put out - no doubt! But they actually did a really good job. They moved quickly, they acknowledged the breach, cooperated with law enforcement, and reassured users that their personal funds remained untouched. The exchange didn’t even freeze withdrawals or try to hide the damage under the rug. It was a very clean and grown up, if not somewhat painful admission: Something bad has happened, but we’re ok. 

FTX’s downfall, on the other hand, was like watching a car crash in slow motion. With every passing day, another crash test dummy would admit a new jaw dropping piece of evidence before also flying through the windshield. 

FTX didn’t fall victim to hackers; it was gutted from within. Billions in customer funds had been secretly funneled into risky bets at Alameda Research, Sam Bankman-Fried’s hedge fund-slash-slush-fund. When the truth leaked, the panic was immediate. Customers rushed to withdraw, only to discover the money wasn’t there. Within days, FTX froze accounts, then Binance staged a brief and hollow rescue attempt, and the whole operation collapsed into bankruptcy.

The starkest difference between these two disasters wasn’t the scale, it was the response. ByBit, despite the enormity of the breach, maintained their integrity and composure. No customer funds were lost, no withdrawals were blocked. The exchange didn’t pretend the hack was anything less than devastating, but it also didn’t pretend the problem was anything other than what it was: a big security failure.

FTX, on the other hand, operated like a Ponzi scheme in its final days. Even as the ship sank, Bankman-Fried continued tweeting vague assurances, insisting everything was “fine” while his lawyers scrambled to stop the bleeding of their $8 billion wound. Customers weren’t just victims of bad luck, they were actively lied to until the very end.

ByBit’s hack was a wake up call for security, and while it didn’t help the overall vibe of the market, it also didn’t completely tank the market. Bitcoin dipped, regulators grumbled, but the exchange itself survived. Because the problem was identifiable and fixable. What do you do when you get hacked? You make better protocols, better vetting, better defenses. The damage was severe, but it wasn’t existential.

The impact of the FTX’s collapse is still ongoing. For one, Sam is still in prison, but for many users their trust is completely broken. For people on the fence, stories like this are all they need to stay well away from crypto for life. Because the FTX collapse struck at the heart of crypto’s biggest weakness: trust. If users can’t be sure an exchange actually holds their money, the entire premise of decentralized finance is dead on arrival. 

Disasters are inevitable in crypto. The question is whether they’re survivable. ByBit proved that even a catastrophic hack doesn’t have to be a death blow if a company is transparent, acts quickly, and  doesn’t treat its users like idiots. FTX meanwhile, showed how easily the whole house of cards can collapse when the people in charge stop seeing customers as anything more than exit liquidity.

In the end, the difference between a crisis and a catastrophe comes down to one thing: Are you the victim of a heist, or the architect of a scam? 

ByBit got robbed. 

FTX robbed its own customers. 

Only one of them is still around.