- eXch will shut down after being linked to a large-scale crypto theft from Bybit.
- The platform confirmed it processed part of the stolen funds and faced surveillance pressure.
- Bybit paid $2M to bounty hunters for info to trace and freeze stolen funds on other platforms.
Cryptocurrency exchange eXch announced plans to shut down by May 1, following allegations that it was used to launder $35 million stolen from Bybit. According to an update from its team, the decision followed the majority vote by eXch’s core members to “cease and retreat” operations. This came amid growing claims that North Korea’s Lazarus Group routed part of the $1.4 billion stolen through the platform. The firm disclosed that it had become the target of an “active transatlantic operation” aimed at dismantling the service and pressing legal charges.
Management Responds to Mounting Pressure
In a statement published on its platform, eXch confirmed receiving intelligence from state-linked operatives regarding ongoing investigations into laundering activities involving stolen cryptocurrency. Besides this, the team claimed it endured repeated attempts to disable its infrastructure as part of this broader campaign.
The platform initially denied accusations that it had supported North Korea’s Lazarus Group. However, it later admitted to handling a “small portion” of the stolen funds. The team reiterated that the platform was never intended to support illicit activity. It emphasized that it operated on a principle of preserving client privacy without enforcing what it called “unjust rules.” Additionally, eXch criticized systems that claim to offer scoring mechanisms, arguing they are monetized tools created by intermediaries that collect funds under the guise of regulation.
Fallout From the Bybit Breach
The $1.4 billion Bybit breach is regarded as one of the most extensive incidents in the history of the cryptocurrency industry. On February 21, CEO Ben Zhou said the platform had enough reserves to “cover the loss” in case the funds were not recovered. Later developments saw Bybit shut down its NFT marketplace and part of its Web3 services.
Bybit had recovered its pre-hack market share of about 7% as of April 10. It also paid $2 million to bounty hunters who provided information that could help trace and freeze portions of the stolen funds on other platforms.
Related: Avalon Labs, Bybit Launch Fixed-Rate Bitcoin Lending
Implications for Privacy-Focused Crypto Platforms
The shutdown of eXch highlights the increased scrutiny facing exchanges that avoid KYC requirements, especially when they are implicated in cross-border criminal cases. Consequently, this development marks a shift towards enforcing stronger compliance measures across the cryptocurrency industry. Furthermore, authorities may now intensify efforts to trace blockchain activity, pushing platforms to reassess their operational models in the face of global regulatory scrutiny.
