Bybit Urges ParaSwap to Return Profits from Lazarus Transactions

Bybit has called on the ParaSwap DAO to return 44.67 wETH (approximately $100,000) earned from transaction fees by the Lazarus Group, which stole these funds from the platform.

Verification of Proposal Authenticity ? @paraswap

We hear the DAO community’s concerns and want to reassure you — this proposal is legitimate and comes directly from Bybit.

Check the proposal in detail here: https://t.co/JUvPdXBkSZ

— Bybit (@Bybit_Official) March 5, 2025

The request was published on the forum on March 4. The proposal to freeze and return the assets to the specified wallet sparked debate among community members. Some users claimed the publication required verification. On March 5, Bybit confirmed it had initiated the request.

Taproot Wizards co-founder Udi Wertheimer noted that refusing to return the funds could be seen as profiting from a hacking attack, which would harm the platform’s reputation and attract increased regulatory scrutiny.

Bybit asked to return 44.67 ETH from the Paraswap DAO that Bybit hacker paid in SWAP FEES.

This decision has ethical and legal responsibilities against the DAO and sets a precedent for the wider DeFi ecosystem (notably Thorswap).

I’m a Paraswap DAO delegate but still split on… pic.twitter.com/gz83dk6whR

— Ignas | DeFi (@DefiIgnas) March 4, 2025

However, he also warned that returning the assets could create a risky precedent for DAOs, undermining the key principle of decentralized protocols: “Code is law.” 

According to Wertheimer, the fees were legitimately earned through smart contracts. If the DAO makes an exception, it could jeopardize the entire DeFi ecosystem. In the future, new demands for fund returns, including contentious ones, could arise, the expert explained.

Some users supported the option of a partial return. They suggested transferring the majority of the funds but retaining 10% as a bounty for the DAO, aligning with Bybit’s own vulnerability policy. Other participants opposed the initiative, fearing reputational and legal consequences.

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 for exchanging and laundering funds. 

On February 27, THORChain’s lead developer, known as Pluto, announced he would leave the project following the cancellation of a vote regarding the blocking of transactions by the perpetrators.