eXch Collapse: Accused of Laundering Crypto for Bybit Hackers, Platform Bows Out

Privacy-focused cryptocurrency exchange eXch has confirmed it will officially terminate all operations effective May 1st, following escalating international scrutiny and mounting allegations of its role in laundering funds linked to the February Bybit hack.

According to the team, the move comes after internal consensus among its leadership to “cease and retreat” rather than continue under what it described as a hostile operating environment.

The shutdown follows the emergence of what eXch claims is an “active transatlantic operation” reportedly targeting the platform with the intent to dismantle its infrastructure and pursue criminal charges. This included accusations of enabling terrorism financing and laundering roughly $35 million in crypto allegedly traced back to North Korea’s Lazarus Group.

eXch to Wind Down

While the eXch team acknowledged that a small portion of illicit funds may have passed through the platform, they vehemently denied any intentional facilitation of criminal activity.

eXch also rejected the characterization of its services as a “mixer,” despite comparisons by on-chain analysts. The platform’s founders criticized the broader crypto compliance landscape, aiming at what they called the “nonsensical policies” of exchanges that rely on third-party AML scoring APIs, which they argue can be easily bypassed and offer little real protection.

As the exchange prepares to wind down, it has announced the establishment of a 50 BTC open-source fund to support privacy-preserving financial tools and wallets across various ecosystems, including Bitcoin, Ethereum, and Thorchain. Partners will retain limited access to APIs until the transition of control to a new management group is finalized.

“The goals we certainly never had in mind were to enable illicit activities such as money laundering or terrorism, as we are being accused of now. We also have absolutely no motivation to operate a project where we are viewed as criminals.

This doesn’t make any sense to us. Originally, we were just a team of privacy enthusiasts with main areas of interest quite distant from cryptocurrency, where we saw the absolutely unfair happenings. This project was an attempt to restore balance in this industry.”

Bybit Hack

The February Bybit hack, which drained over $1.5 billion in digital assets including stETH and mETH, ranks among the largest thefts in crypto history. Onchain investigators ZachXBT and Nick Bax of Security Alliance had previously alleged that eXch facilitated the laundering of funds stolen in the Bybit hack by North Korea’s Lazarus Group.

Additional claims from blockchain analysts and security firm SlowMist support the accusation, which cited Ether transfers from hack-linked wallets.

Despite the severe blow, Bybit has managed to regain momentum in the market. As of April 9, analytics firm Block Scholes reported the exchange’s market share had climbed from a low of 4% after the breach to about 7%. This rebound reflected a strong comeback in spot trading volume and overall exchange activity, suggesting the platform is recovering more quickly than many had initially anticipated.