Lessons from a hack, and Germany scrapes through

Plus, macro gets brittle

“A reliable way of making people believe in falsehoods is frequent repetition because familiarity is not easily distinguished from truth.” – Daniel Kahneman ||

Hi everyone, I hope you’re all well!

Eeek, a late send today, apologies. 😖

Yet another tense weekend, what with the Bybit hack and the German elections. Below, I touch on what happened in each, and I update on building macro jitters.

IN THIS NEWSLETTER:

• Lessons from a hack

• Macro gets brittle

• Germany scrapes through for now

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WHAT I’M WATCHING:

Lessons from a hack

Ouch.

On Friday, crypto exchange Bybit – one of the largest in the world in trading volume – reported a hack of ETH worth approximately $1.5 billion, in what looks like the largest theft in crypto history.

I won’t go into the weeds of how it happened – here’s a good summary if you’re interested in more detail – but, basically, the hackers changed the front-end of the transfer contract, deceiving signers into thinking they were moving tokens to a Bybit address when in reality they were going somewhere else.

This highlights the scariest aspect of the incident: it happened to an experienced team using multi-sig custody.

The market’s reaction to the news was unusual. Normally, you’d expect token prices to plummet on uncertainty as to the solvency of one of the ecosystem’s largest platforms, as well as the possible need to panic-sell assets to raise the shortfall.

But markets were surprisingly calm. ETH suffered a short-lived drop, but remained within February’s relatively tight trading range.

(ETH/USD chart via TradingView)