Comment by karmakaze

I have no idea how crypto exchanges work. Could someone ELI5 some of this? I have questions:

Did the cold storage wallet contain users' ETH? That seems implied by "Can Cover Loss".

If so, why does a crypto exchange hold users' ETH in a wallet that can execute transactions without said user's authorization/password for each transaction. Doesn't even Facebook require entering a password every time to change certain profile settings?

Or maybe more generally, why does there need to be such a large cold-storage wallet to run an exchange?

Also how or why would they have the assets to be able to cover this?

There's some other seemingly conflicting info I found in searches for Bybit:

- Bybit is not legal in Canada. Bybit is restricted in Canada and other jurisdictions, including the United States, the United Kingdom, and Singapore.

- Bybit originates from Singapore, a global hub for cryptocurrency and blockchain technology. Singapore has a favorable regulatory environment for cryptocurrencies, which has attracted many exchanges to establish their headquarters there.

- There's also a mix of results where some say Bybit is safe/secure and others saying they aren't (irrespective of this event). This story seems to indicate that they had measures to make it safe, but it didn't save them.