German Authorities Seize $38 Million in Crypto from eXch to Combat Money Laundering

German authorities have taken decisive action against the crypto exchange eXch, seizing approximately $38 million worth of cryptocurrencies. This seizure is part of a broader effort to combat illegal activities facilitated by crypto swapping platforms. The confiscated assets include Bitcoin, Ether, Litecoin, and Dash, valued at around $38 million as of April 30. This action marks a significant move in Germany's efforts to curb money laundering and other illegal activities in the crypto space.

The eXch platform, which started in 2014, facilitated anonymous exchanges of crypto assets without implementing anti-money laundering protocols or know-your-customer measures. This lack of regulatory compliance made eXch a favored destination for funds from various large-scale hacks and exploits. The platform's servers, which hosted its infrastructure, were seized by the Frankfurt Prosecutor General's Office unit for combatting internet crime and the Federal Criminal Police office. This move was anticipated to prevent the founders of eXch from absconding with the wallets, potentially leaving depositors with significant losses.

The seizure of eXch's assets is a critical development in the ongoing efforts to curb money laundering and other illegal activities in the crypto space. The platform had previously refused to freeze funds linked to the Bybit hack, citing concerns about reputation damage and the blacklisting of funds originating from eXch addresses. This stance, coupled with its no-KYC policy, made eXch a favored destination for funds from various large-scale hacks and exploits.

The confiscated assets are now under the control of German authorities, who are likely to use them to compensate victims of the hacks and other illegal activities. This seizure is a significant step towards enhancing the transparency and security of the crypto market, as more operators strive to comply with regulatory standards. The actions taken by German authorities send a clear message that illegal activities facilitated through crypto swapping platforms will not be tolerated.

The eXch platform was shut down by its management, not by law enforcement, but the decision to cease operations came after the seizure of its assets. The platform had hinted at a potential relaunch under new management, but these plans have since been put on hold. The seizure of eXch's servers and assets is a stark reminder of the risks associated with non-compliant crypto platforms and the importance of adhering to regulatory standards.

German prosecutors estimate that around $1.9 billion in crypto have been moved through eXch since its inception, part of which came from criminal origins. The statement also noted that a portion of the $1.4 billion in crypto stolen from Bybit, attributed to the North Korean hacker group Lazarus, was laundered through eXch. The operators of eXch are therefore suspected of commercial money laundering and the operation of a criminal trading platform on the Internet.

While eXch announced mid-April that it would shut down on May 1, the German authorities said they anticipated the move and secured evidence before the closure, despite the short notice. In its April announcement, eXch said there was a "transatlantic operation" to close down its operations and prosecute the team for money laundering and terrorism-related charges. The platform's operators also lamented that their privacy-centered goals were being misinterpreted, and AML measures placed in other exchanges were not effective. "Any instant exchangers that screen their customer deposits using third-party APIs and appeal to nonsensical AML/KYC terms are far from preventing money laundering and terrorism," eXch said at the time. "Privacy is not a crime."