Arthur Hayes Advocates Ethereum Rollback to Recover Bybit’s $1.4B Loss, Triggers Heated Debate

Arthur Hayes, co-founder of BitMEX and a prominent Ethereum (ETH) investor, recently proposed rolling back the Ethereum blockchain to mitigate losses from the Bybit exchange hack, which resulted in the theft of nearly $1.4 billion in ETH. His suggestion, posted on social media, quickly sparked a strong backlash from the Ethereum community.

“@VitalikButerin will you advocate to roll back the chain to help @Bybit_Official?” Hayes wrote, directly addressing Ethereum co-founder Vitalik Buterin. He further elaborated, “My own view as a mega $ETH bag holder is $ETH stopped being money in 2016 after the DAO hack hard fork. If the community wanted to do it again, I would support it because we already voted no on immutability in 2016—why not do it again?”

As of the time of publication, Buterin had not responded to Hayes’ proposition.

While some observers, such as Unchained’s Laura Shin, questioned whether Hayes’ post was serious or satirical, it nonetheless raised an important debate regarding the feasibility of a blockchain rollback. CoinDesk attempted to contact Hayes for clarification but had not received a response at the time of writing.

Gautham Santhosh, co-founder of Polynomial.fi, commented on the controversy, stating, “I wish we could roll back for the Bybit hack—I’m not against the idea. But the DAO hack was 15% of ETH with a clean recovery path. Today, a rollback would break bridges, stablecoins, L2s, RWAs, and so much more. The ETH ecosystem is just too interconnected now for a clean solution like 2016.”

The Complexity of a Blockchain Rollback

Hayes’ proposed rollback would involve reverting Ethereum’s blockchain to a previous state before the hack occurred, effectively erasing malicious transactions and restoring stolen funds. However, such an action would require broad consensus among network participants.

A historical precedent exists: in 2016, the Ethereum network implemented a contentious hard fork to reverse the infamous DAO hack, which saw $60 million in ETH stolen. This decision resulted in Ethereum splitting into two separate chains: Ethereum (ETH) and Ethereum Classic (ETC). At the time, the process was described as an “irregular state transition” rather than a rollback, and it ignited an intense debate over blockchain immutability.

Blockchain immutability ensures that once data is recorded, it cannot be altered, making transactions trustworthy and resistant to tampering. The concept is a cornerstone of decentralization, making rollback proposals highly controversial.

A similar debate arose in the Bitcoin community in 2019 when Binance CEO Changpeng Zhao suggested the possibility of a “re-org” following a $40 million hack. However, the Bitcoin mining community overwhelmingly rejected the idea, emphasizing the network’s commitment to decentralization and immutability.

Ethereum’s structure makes a rollback even more challenging today. Unlike Bitcoin’s UTXO model, Ethereum uses an “accounts” model, similar to traditional bank accounts. Unlike in 2016, when nodes could upgrade to new software and migrate ETH to new addresses, Ethereum’s current ecosystem—comprising bridges, stablecoins, Layer 2 solutions, and real-world assets—has become highly interconnected, complicating any attempt at reversal.

While the concept of reversing transactions after a hack is not unprecedented—smaller blockchain networks like Vericoin have previously executed such maneuvers—Ethereum’s scale and complexity make such an approach practically infeasible.

The Bybit Hack and Its Aftermath

The Bybit hack was first identified on Friday by on-chain investigator ZachXBT, who flagged suspicious outflows exceeding $1.4 billion from the exchange. The attacker rapidly converted mETH and stETH into ETH using decentralized exchanges.

Further investigations linked the exploit to the North Korean Lazarus Group, known for orchestrating large-scale cyber thefts. According to Polynomial.fi’s Santhosh, the hacker subsequently distributed 10,000 ETH to 39 different addresses and another 10,000 ETH to nine additional addresses.

Bybit CEO Ben Zhou confirmed the nature of the attack, stating that the hacker “took control of a specific ETH cold wallet and transferred all the ETH to an unidentified address.” Despite the substantial losses, Zhou assured that Bybit remains solvent, even if the stolen funds are not recovered.

This event reignited discussions surrounding Ethereum’s governance and the fundamental principle of immutability, with the majority of the community rejecting the rollback notion outright.

Read More: Ether Price Spikes Further on Reports of Bybit Starting to Buy ETH

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