Bybit Demands ParaSwap to Return $100K in Fees from Lazarus Group Transactions

Bybit has urged the ParaSwap DAO to return 44.67 wETH (approximately $100,000), funds generated from transaction fees involving the Lazarus Group, which stole these assets from the exchange.

The request was posted on the forum on March 4. The proposal to freeze and return the assets to a specified wallet sparked debates within the community. Some members noted that the post needed further verification. On March 5, Bybit confirmed it initiated the request.

Udi Werthheimer, co-founder of Taproot Wizards, pointed out that refusing to return the funds could be interpreted as profiting from a hacking incident, which would negatively impact the platform’s reputation and attract more scrutiny from regulators.

However, he also warned that returning the assets might set a dangerous precedent for DAOs, violating a core principle of decentralized protocols: «Code is law.»

According to Werthheimer, the fees were earned legitimately through smart contracts. If the DAO makes an exception, it could jeopardize the entire DeFi ecosystem. He explained that future demands for refunds, including potentially contentious ones, would likely arise.

Some users expressed support for a partial refund option. They suggested transferring the majority of the funds while keeping 10% as a bounty for the DAO, in line with Bybit’s own vulnerability policy. Other participants opposed the initiative, concerned about potential reputational and legal ramifications.

It is worth noting that from February 24 to March 2, the THORChain protocol processed a record $4.66 billion in swaps. Analysts reported that Bybit hackers used the platform to exchange and launder stolen funds.

On February 27, the main developer of THORChain, known as Pluto, announced that he would leave the project after a vote concerning the blockage of the malicious transactions was canceled.