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Crypto Mixer eXch Calls It Quits: Under Fire Over Bybit Hack

Cryptocurrency exchange eXch will close down on May 1 after being accused of facilitating money laundering of funds stolen in the record-breaking Bybit hack. The firm made the announcement yesterday in a statement that cited pressure from law enforcement as the primary reason for closure.

North Korean Hackers Tied To Stolen Funds

eXch was allegedly employed by North Korea’s Lazarus Group to wash around $35 million, part of a significantly larger $1.4 billion heist in February from rival exchange Bybit. The attack is one of the largest ever on the cryptocurrency space.

After initially claiming not to have participated, eXch later acknowledged that it had facilitated some funds from the hack. The exchange minimized this operation, referring to it as “an insignificant portion of funds” but refusing to state precisely how much money passed through their service.

Management Team Votes To ‘Cease And Retreat’

Most of the leadership of eXch decided to shut operations instead of ongoing struggles with what they termed as “an active transatlantic operation” geared towards them. Law enforcement appears to be trying to develop evidence to lead criminal charges against the exchange.

“We do not see any utility to work in a hostile environment where we are targeted by SIGINT merely because some individuals misunderstand our objectives,” eXch said in their release. SIGINT is a term used to describe “signals intelligence”, implying government agencies are intercepting their communications.

The exchange attempted to present their shutdown as a stance on privacy. They asserted that other cryptocurrency platforms “abuse customers with nonsensical policies” in rolling out anti-money laundering measures. This position seems to put eXch forward as a victim instead of addressing the charges directly.

Bybit Recovers From Record-Breaking Hack

The February attack on Bybit caused immediate panic, with users withdrawing more than $5 billion from the platform. CEO Ben Zhou initially reassured customers on February 22 that the exchange could “cover the loss” if the stolen money wasn’t recovered.

After the hack, Bybit shut down its non-fungible token market and suspended certain Web3 services. Despite all this, the exchange has recovered very well. By April 10, Bybit had regained its pre-hack market share of around 8%.

Bybit provided more than $2 million in incentives for bounty hunters who assisted in tracking the stolen money. This move seems to have paid off. According to reports, officials have been able to freeze about 85% of the stolen $1.4 billion by following transactions to other exchanges.

The eXch shutdown illustrates repeated difficulties in the regulation of cryptocurrency exchanges. In providing users with privacy and convenience, these websites occasionally serve as conduits for transferring stolen funds, causing a conflict between advocates of privacy and those combating financial crime.

Featured image from Pexels, chart from TradingView



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