German authorities have made a significant breakthrough in the investigation into the Bybit hack by seizing €34 million ($38 million) in crypto from the platform eXch. This marks the third-largest crypto confiscation in the history of Germany’s Federal Criminal Police Office (BKA) and Frankfurt’s main prosecutor’s office. The seized assets include Bitcoin (BTC), Ether (ETH), Litecoin (LTC), and Dash (DASH).
eXch, a platform that described itself as a privacy-centric “swapping” service, allowed users to exchange crypto assets across different blockchains without the need for identity verification or compliance with Anti-Money Laundering (AML) regulations. This lack of compliance made it an attractive option for criminals looking to launder stolen funds and obscure their origins through tactics like token hopping and cross-chain bridges.
According to the BKA’s findings, eXch was involved in laundering over €1.75 billion ($1.9 billion) worth of crypto, much of which is believed to have come from criminal activities. Crypto security analyst ZachXBT confirmed that eXch played a significant role in processing funds from other high-profile incidents, including multisig wallet exploits, exchange-related laundering, and phishing schemes.
Despite denying allegations of helping the Lazarus Group launder stolen funds, eXch announced its shutdown on May 1, citing increasing pressure and intelligence targeting its servers. However, the platform resumed operations on April 27, with TRM Labs revealing that its backend API remained active, allowing criminal groups to continue using eXch for illicit activities.
TRM Labs also found that eXch was still being used by groups linked to child sexual abuse material (CSAM), with over $300,000 connected to CSAM passing through the platform. The system’s mixing pools made it difficult to differentiate between clean and criminal funds, posing a significant challenge to law enforcement efforts.
The seizure of funds from eXch is a significant development in the investigation into the Bybit hack, shedding light on the platform’s role in facilitating illicit crypto transactions. The crackdown on eXch highlights the ongoing challenges posed by crypto platforms that enable money laundering and illicit activities, underscoring the need for increased regulatory oversight and enforcement in the cryptocurrency space.