The Ethereum developers provided an explanation of why the network cannot “roll back” transactions to recover the $1.4 billion that it was stolen.
The analysis compares the current situation with two historical cases in which blockchain inversion is feasible. In 2010, Bitcoin rolled back a transaction when the bug created 184 billion BTC. Developer Tim Beiko said that because of the small network size, protocol violations are clearly violated.
Similarly, Ethereum's 2016 Dao Hack recovery was a success as stolen funds were frozen for 30 days and the community was time to coordinate.
Beiko said there are fundamentally different challenges with Bybit Hack. Theft occurred through a compromised multi-sig interface that made malicious transactions appear legal to signers.
From the Ethereum (ETH) perspective, these transactions followed all protocol rules and left no technical basis for intervention.
Trying to reverse a bibit hack can cause confusion
Beiko also noted that modern cryptocurrency infrastructure has also become more complicated. Stolen funds were immediately mobile and could be routed through decentralized exchanges, lending protocols, and cross-chain bridges.
This interconnection means that attempting to reverse transactions will cause confusion throughout the ecosystem. This could affect legitimate transactions and settlements, he says.
Ethereum could theoretically implement “changes of irregular states” when funds are frozen and isolated, but such proposals in 2018 were faced with strong opposition. The attempt was aimed at retrieving 500,000 frozen ETH from a parity wallet bug, but was rejected due to concerns about centralization and precedent.
Technical limitations have been further highlighted by recent developments. The Crypto Mixer Platform Exchange has rejected Bybit's request for cooperation in tracking stolen funds.
Blockchain security company Slowmist reports that hackers have already started washing ETH through exchanges and are beginning to convert them to Bitcoin (BTC), Monero (XMR), and other cryptocurrencies.
The Slowmist founder warned that the exchange has a history of hostile behavior towards security researchers, and that exchanges that recommend risk management of funds from the platform are recommended.
The rapid movement of assets through mixing services shows why technology solutions like rollbacks are no longer viable for the major thefts of today's crypto ecosystem.
