Bitget CEO Gracy Chen reported a gradual return to normal operations for the cryptocurrency exchange following a security breach that resulted in the loss of $388 million in user funds. In a statement posted on X, Chen confirmed that withdrawals for all tokens would resume on Friday, noting that access to Bitcoin, Ether, and USDt had already been restored. The recovery effort was supported by Bitget’s Protection Fund, which reached $309 million during the incident. Established in January 2022 with an initial allocation of 5,500 BTC, the fund is designed to reimburse users for losses not caused by their own misconduct or platform errors, including specific types of security breaches.
Chen stated that the Protection Fund absorbed the financial impact of the attack, emphasizing its role in such scenarios. While investigating the cause, Bitget has not ruled out involvement from internal actors or North Korean hackers. To aid recovery, the company launched a bounty program offering 5% of frozen funds and 5% of any recovered assets. Blockchain investigator ZachXBT reported that wallets linked to the hack moved approximately $3.8 million in Zcash into the Ironwood pool, representing about 14% of the 18,917 ZEC stolen. Additionally, NEAR Intents announced it blocked $50 million tied to the attackers.
The activation of Bitget’s Protection Fund to cover a substantial portion of the $388 million loss highlights the operational reliance on pre-funded reserves to maintain liquidity and user confidence during catastrophic security failures. By restoring access to major assets like Bitcoin and Ether before fully reopening all withdrawal channels, the exchange prioritized stabilizing core market infrastructure while managing the broader fallout. This phased approach suggests a strategy to mitigate bank runs by demonstrating solvency through the fund’s deployment, effectively using the reserve as a buffer against immediate insolvency claims.
However, the unresolved nature of the threat vector—ranging from potential insider jobs to state-sponsored actors—introduces significant ongoing compliance and credibility risks. The movement of stolen funds into privacy-focused pools like Zcash’s Ironwood complicates asset tracing and recovery efforts, underscoring the limitations of current blockchain surveillance tools against sophisticated laundering techniques. The bounty program indicates a pragmatic but uncertain attempt to incentivize external help, yet the persistence of unblocked illicit flows may attract regulatory scrutiny regarding anti-money laundering controls and the adequacy of the exchange’s security protocols.
