eXch exchange will close after allegations of laundering stolen assets from Bybit

What’s new? The crypto exchange eXch team has decided to shut down in response to allegations of transaction processing by North Korean hackers. According to a statement on the Bitcoin Talk forum, eXch will cease operations on May 1 at the decision of the majority of managers. Earlier, a number of blockchain analysts claimed that eXch facilitated the laundering of $35 million stolen by the Lazarus group from the crypto exchange Bybit.

Announcement on the forum

What else is known? The eXch team stated that the project had no financial goals at the start, it was an experiment by enthusiasts to provide privacy to crypto users, which made it successful.

Despite the accusations, the exchange never intended to facilitate illegal activity, but now the team has “no motivation to operate a project where we are viewed as criminals.”

The eXch believes that the exchange has been the subject of an “active transatlantic operation” aimed at shutting it down and potentially bringing charges. Participants in the project allegedly received confirmation of this information from a number of sources, including state intelligence.

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“Even though we have been able to operate despite some failed attempts to shutdown our infrastructure (attempts that have also been confirmed to be part of this operation), we don't see any point in operating in a hostile environment where we are the target of SIGINT simply because some people misinterpret our goals,” the developers said.

They emphasized that closing eXch will not help in the fight against money laundering and terrorist financing, as many other tools are still available for unscrupulous crypto market participants.

The team also criticized other exchanges that impose inadequately high requirements in terms of AML policies to create the appearance of combating illegal activities:

“If they were serious about this, they would need to stop hiding behind shelf offshore companies and start conducting strict due diligence on every customer, which none of them do in reality. The absurdity is compounded by the absolute uselessness of the address score reporting APIs they use, as any of these screening mechanisms can be easily bypassed.”

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eXch reminded that users who wish to remain anonymous still have the option to use cryptocurrencies with full or optional privacy, such as Monero, Litecoin, and Dash, the Tornado Cash crypto mixer, or the Bitcoin CoinJoin protocols.

Initially, eXch denied analysts’ reports of laundering funds for Lazarus Group, but acknowledged that it processed “insignificant portion of funds.”

The February 21 hack of Bybit on February 21 was the largest in history, with the exchange losing nearly $1,5 billion in assets. CEO Ben Zhou claimed that the exchange would be able to cover the losses in case the funds could not be recovered, but the team later launched an optimization process that will see the closure of many Web3 trading and passive income services, as well as the NFT marketplace.

As of April 10, Bybit had regained its market share achieved before the hack: approximately 7%. The exchange paid analysts more than $2 million for information that could have been used to freeze stolen assets.