Cryptocurrency exchange eXch will close on May 1 due to accusations of laundering funds from the Bybit hack. North Korea’s Lazarus Group is linked to the incident, which involved $35 million of laundered money from a larger $1.4 billion breach. eXch acknowledged handling a portion of these funds while facing significant pressure from law enforcement. The complex relationship between user privacy and financial regulations in cryptocurrency is further illustrated by this closure.
Cryptocurrency exchange eXch has announced its closure effective May 1, following accusations of facilitating money laundering linked to the Bybit hack. The decision to shut down was attributed to pressure from law enforcement as well as the negative implications of operating under scrutiny.
Allegations suggest that eXch was involved in laundering approximately $35 million connected to a larger $1.4 billion hack executed by North Korea’s Lazarus Group during February. Initially denying involvement, eXch later recognised its role in processing a fraction of the stolen funds, although it described the amount as trivial, not specifying the exact figures.
The management team at eXch voted to cease operations due to ongoing investigative pressure, referring to it as an “active transatlantic operation” against them. They expressed concerns over being victimised by signals intelligence (SIGINT), suggesting government oversight into their communications.
In defence of their shutdown, eXch claimed to prioritise user privacy, criticising other exchanges for imposing stringent anti-money laundering measures that infringe on customer rights. This stance positions eXch as a victim, sidestepping direct responses to the allegations.
In the wake of the Bybit hack, panic ensued among users, leading to over $5 billion in withdrawals. Bybit’s CEO reassured customers, stating the exchange could cover losses if unrecovered funds were restored. Despite the turmoil, Bybit has successfully recuperated its market share by implementing services and offering bounties to track down the stolen assets.
The eXch closure underscores the challenges inherent in cryptocurrency regulation, where the balance between user privacy and the need to combat financial crime often leads to tensions within the sector.
This incident highlights the ongoing struggle within the cryptocurrency environment to maintain trust and security while also providing user privacy and convenience.
