eXch Shuts Down After Bybit Hack Laundering Allegations

The controversial cryptocurrency exchange eXch has announced its closure in May, following allegations that it facilitated the laundering of cryptocurrency stolen in the Bybit hack earlier this year. The hack, which occurred in February, resulted in the theft of nearly $1.5 billion worth of Ethereum (ETH) and Lido Staked Ether (stETH), marking it as one of the largest crypto thefts in history.

Blockchain research firm Elliptic, along with pseudonymous on-chain investigator ZachXBT and other researchers, attributed the exploit to the Lazarus Group, a notorious North Korean cybercriminal organization known for its high-profile hacks on major crypto platforms. Elliptic's investigation revealed that Lazarus used eXch as part of its money-laundering process for the stolen funds. Despite these allegations, eXch denied involvement in money laundering, admitting only to processing a small portion of the stolen Bybit funds.

In a recent announcement on the BitcoinTalk forum, eXch stated that it would be shutting down on May 1st. The exchange cited an "active transatlantic operation" targeting it, claiming that "friends" in the state intelligence sector had confirmed this. The exchange expressed frustration with operating in a hostile environment where it is the target of Signals Intelligence (SIGINT) due to misinterpretations of its goals. The decision to shut down was made after a merger with a new management team and urgent meetings, with the majority voting to cease operations rather than continue in a challenging environment. The exchange emphasized its commitment to avoiding harm to innocent people or the forum community.

The closure of eXch highlights the ongoing challenges faced by cryptocurrency exchanges in navigating regulatory scrutiny and allegations of illicit activities. The incident underscores the need for enhanced security measures and compliance with anti-money laundering regulations to protect the integrity of the crypto ecosystem. As the industry continues to evolve, exchanges must prioritize transparency and accountability to build trust with users and regulators alike.