eXch Shuts Down After $35M Laundering Allegations

Cryptocurrency exchange eXch has announced its decision to cease operations effective May 1, following allegations that the platform was used to launder funds from a significant hack on another exchange, Bybit. The allegations suggest that North Korea’s Lazarus Group utilized eXch to launder approximately $35 million of the $1.4 billion stolen in the Bybit exploit.

In an official notice released on April 17, eXch stated that the majority of its management team voted to shut down operations in response to the allegations. The exchange claimed it was the target of an active transatlantic operation aimed at shutting it down and potentially pursuing legal charges. Despite previous attempts to shut down its infrastructure, eXch asserted that it had managed to continue operating, but the hostile environment made it untenable to continue.

eXch initially denied reports from crypto investigators that it had laundered digital assets for the Lazarus Group. However, the exchange later admitted to processing a small portion of the funds from the February hack. The management team emphasized their commitment to user privacy, criticizing other exchanges for implementing policies that they deemed abusive to customers in the fight against money laundering.

The Bybit hack, one of the largest in the history of the crypto industry, resulted in over $5 billion in withdrawals from users, including the stolen funds. Bybit’s CEO, Ben Zhou, initially stated that the exchange had the means to cover the loss if the funds were not recovered. However, the firm later announced it would shut down some of its Web3 services and close its non-fungible token marketplace.

As of April 10, Bybit had regained its market share achieved before the hack, approximately 7%. The exchange paid over $2 million to bounty hunters providing information that could be used to freeze some of the funds traceable to other platforms, which was estimated to be roughly 89% of the $1.4 billion as of March 20.