Chainflip Rejects Bitget Hacker's Cross-Chain Deposit, Funds Not Converted or Frozen, Returned to Hacker's Address
Bitget's stolen funds attempted to be transferred via Chainflip, but the broker rejected the deposit. The funds were not converted or frozen and were ultimately returned to the hacker's address.
After unauthorized withdrawals from Bitget's hot wallet, the official estimated loss was revised from approximately $351.6 million to about $387.5 million, covering assets such as ETH, XRP, USDT, USDC, BNB, AVAX, TRX, and ZEC, while the cold wallet remained unaffected. The attacker initially tested with 0.184 ETH and 193 TRX below the risk control threshold, then completed large multi-chain withdrawals within about an hour. On-chain tracking shows that part of the stolen funds was converted to BTC through channels like Thorchain, Umbra, Stargate, and Chainflip.
The rejected path differed from the previously successful Chainflip channel. Public on-chain reviews indicate that the attacker had deposited about 2,353 ETH into the Chainflip liquidity account and withdrew approximately 74.46 BTC, with another approximately 150 ETH directly converted to BTC via Chainflip; records show that some TRX was also converted to BTC through Ethereum before entering Chainflip, leaving about 9,997 USDT pending. The new attempt was intercepted by the broker, indicating that the screening had covered this deposit, but the protocol did not withhold the assets.
Chainflip's rejection mechanism operates at the broker level: the interface can reject high-risk deposits, and rejected funds are returned to the refund address provided by the user. This capability was first applied to BTC and later expanded to Ethereum and ERC20. After the stolen funds from Bybit flowed in, the network had cut off the main frontend and pushed for broker screening upgrades; the rejection of the Bitget-associated address followed the same logic. The return indicates that the address label is effective but does not constitute a judicial freeze.
Other exit points were not simultaneously closed. Thorchain continued to process exchanges, citing decentralization and permissionlessness, even after receiving Bitget's request to deny service to the attack address; some TRX was exchanged for USDT via Sunswap before bridging to Ethereum, entering the same money laundering chain. Circle and Tether's blacklisting of certain stablecoin addresses only locked up about $318,000, which is negligible compared to the total stolen funds. Approximately 48,900 ETH remains in wallets that have never been transferred out.
Bitget stated that the intrusion was due to a zero-day vulnerability in a third-party security product, with the attacker obtaining high-level internal credentials to forge withdrawal instructions, signed out by the exchange's own authorization process, with no private keys stolen. The protection fund claims to cover losses exceeding $464 million, and Bitcoin withdrawals have reopened as planned, with other assets to be restored in phases. Mandiant and SlowMist are still gathering evidence, and a complete technical report has not yet been released.
From a market mechanism perspective, this is an event-driven compliance rejection, not a market transaction. Brokers and liquidity providers choose not to accept dirty money to avoid contaminating their pools and subsequent freezing risks; the hacker bears the delay in refunds and further exposure of addresses. Benefiting are the cross-chain interfaces still running screenings, while the burden falls on permissionless exchange channels: funds will reroute through Thorchain, mixing, and one-time addresses. The stolen funds have not disappeared; they simply failed this jump.
On-chain trackers state they will continue to follow subsequent splits, chain changes, and exchanges from the returned addresses. In public reviews, BTC has mostly entered stripping addresses, with some entering CoinJoin; a large portion of XRP has left the initial receiving address and converted significantly to BTC.
Source: Public Information
ABAB AI Insight
After approximately $1.5 billion was stolen from Bybit in February 2025, similar cross-chain exchange protocols became the standard exit layer for North Korean-associated groups: first quickly converting altcoins and stablecoins to ETH, then exchanging them for BTC through permissionless cross-chain methods, and finally entering mixing. Chainflip's decision to cut off the main frontend and grant brokers the right to reject deposits was a policy adjustment made after that dirty money washed liquidity. The signature chain link tricked in Bitget this time is similar to Bybit's "interface was altered, signer approved a fake transaction," both representing failures at the authorization layer, not private key loss.
The capital path is clear: after the exchange's hot wallet was drained, the money needed to quickly escape from frozen assets. Stablecoins would be blacklisted by issuers, so they needed to be converted to ETH and BTC; cross-chain protocols provide a one-time exit for "chain change + currency change." The attacker has proven that Chainflip's liquidity account can serve as a withdrawal channel, indicating that there were loopholes in the screening before. Broker rejection effectively shifts the exit from the protocol layer to the interface layer, returning the money to the original address, making tracking labels more stable.
In similar positions, Thorchain chose to continue with permissionless exchanges, while Chainflip opted to let the interface bear compliance. The industry phase has shifted from "whose bridge is faster" to "who dares to accept dirty money." Platforms like FixedFloat and eXch have been named or shut down after Bybit, leaving the remaining exits more concentrated on a few protocols that still publicly refuse cooperation, as well as mixing and privacy coins.
Structural judgment belongs to regulatory changes pressing on technical permissionlessness. On-chain interception is not possible, but the deposit channel is controlled by brokers, effectively outsourcing the review to the interface. Dirty money is returned rather than confiscated, indicating that decentralized protocols can refuse service but do not have the right to seize. The result is that money laundering has shifted from "one big bridge" to "multiple hops and trial and error," increasing costs, extending tracking windows, and shifting pricing power from the bridge itself to the entry points willing to conduct screenings.
ABAB News · Cognitive Law
Money that can be returned indicates you have been seen, not let go.
Permissionlessness brings speed, screening brings survival.
When an exit is closed, stolen funds do not disappear; they only change paths and become more expensive.