Crypto Exchange eXch to Shut Down After Hack-Related Laundering Allegations

Highlights:

• Crypto exchange eXch to shut down by May 1 after facing money laundering allegations.
• Management cites global pressure and SIGINT surveillance for platform closure.
• A new management team will oversee the transition of platform control.

Cryptocurrency platform eXch announced that it is going to cease its operations by May 1st due to the increasing scrutiny pressure. The platform was tied to money laundering of $35 million from the $1.4 billion Bybit hack that occurred in February. Authorities suspect the Lazarus Group from North Korea of utilizing eXch during the transfer of the funds. The announcement came after the management board voted to “cease and retreat” from operations.

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eXch disclosed that it became the subject of an “active transatlantic operation” against its infrastructure. The firm noted that it had continued to operate online despite attempts by external actors to take the site down. However, leadership attributed their withdrawal to surveillance from signals intelligence (SIGINT). They also asserted that their mission was misunderstood, which forced the shutdown decision.

Cryptocurrency exchange eXch announced it will cease operations on May 1 following allegations linking it to North Korea’s Lazarus Group, accused of laundering approximately $35 million connected to the $1.4 billion Bybit hack. The exchange acknowledged handling a small portion…

— Wu Blockchain (@WuBlockchain) April 18, 2025

Lazarus Group Connections and Fallout From the Bybit Hack

The recently recorded Bybit hack ranked as the most significant hack, with hackers using phishing tools to steal 401,000 ETH. Blockchain analysis pointed to stolen funds passing through decentralized exchanges, bridges, and anonymity services that include eXch. Blockchain analytics firms Elliptic and TRM Labs identified the eXch as being part of the laundering path. Contrary to their earlier statements, eXch agreed that it dealt with some of the stolen funds.

The platform downplayed the involvement, stating that the sum was small and its function had been misrepresented. It further argued that it had no intention of enabling unlawful activity and was a privacy-focused marketplace. The company was under pressure as more investigators associated it with the Lazarus Group. These led to the acceleration of the management’s decision to wind down the services.

After experiencing the hack, Bybit decided to freeze the lost assets and incentivize bounty hunters to track the missing tokens. By the end of March, around 89% of the stolen money had been discovered in other exchanges. The hack led to massive user withdrawals and the shutdown of some Web3 services at Bybit later. Despite the losses, Bybit was able to reclaim 7% of its market share by early April.

📢 Important Notice for Bybit Web3 Users

As part of ongoing product optimization, several Web3 services — including Cloud Wallet, Keyless Wallet, DEX Pro, Swap & Bridge, and NFT Marketplace — will be discontinued by May 31, 2025.

Please review the full announcement and take… pic.twitter.com/q8SRnedTmo

— Bybit Web3 (@Bybit_Web3) April 16, 2025

Privacy Values and the Final Transition Plan

The platform defended its position as a pro-privacy marketplace and described other platforms as having “nonsensical” AML policies. It stated that such approaches negatively impact user freedom without stopping the unlawful operations. Additionally, the platform maintained that eliminating one exchange would not reduce laundering in the crypto industry, accusing compliance firms of profiting from flawed data models and exaggerated risks.

In order to further encourage privacy innovation, eXch committed 50 BTC for open-source projects in Ethereum and Bitcoin. It stated that its API would remain live temporarily to allow partners to prepare for their infrastructure shift. A new management team will oversee the platform’s final transition process after May 1. eXch encouraged partners to set up their own liquidity systems to avoid disruptions.

At the end of its statement, the platform insisted on the principle that “privacy is not a crime” defending its principles. The team argued that getting rid of eXch would not stop fraudulent activities within the blockchain industry. As per them, the bad actors are always keen on leveraging other decentralized tools.

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