Crypto Exchange eXch to Shut Down Amid Money Laundering Allegations
Company Announces Decision in Response to Allegations
Cryptocurrency exchange eXch has announced it will cease operations effective May 1, following serious allegations that it was involved in laundering funds related to a major hack on competing platform Bybit. The firm’s management made the decision amidst claims that the North Korean hacking group, Lazarus Group, was able to launder approximately $35 million of the $1.4 billion stolen in the February exploit of Bybit.
In an update issued on April 17, eXch stated that a majority of its management voted for a “cease and retreat” strategy due to the ongoing allegations and the pressure from an “active transatlantic operation” focused on closing down the exchange. This operation, eXch claims, has led to significant challenges in maintaining its infrastructure, despite attempts to undermine its operations.
Management’s Response to the Allegations
In their statement, eXch expressed frustration with the current circumstances, commenting on the hostile environment in which they have found themselves. “Even though we have been able to operate despite some failed attempts to shut down our infrastructure… we don’t see any point in operating in a hostile environment where we are the target of SIGINT [Signals Intelligence] simply because some people misinterpret our goals,” the company explained.
Initially, eXch denied accusations from crypto investigators that it had knowingly laundered digital assets for the Lazarus Group. However, the exchange later acknowledged it had processed what it termed an “insignificant portion of funds” connected to the February incident.
The Bybit Hack: Context and Impact
The hack of Bybit stands as one of the largest in cryptocurrency history, with more than $5 billion in user withdrawals, including funds stolen in the breach. In the immediate aftermath of the attack, Bybit’s CEO Ben Zhou assured users that the exchange had the capacity to cover losses should the stolen funds not be recovered.
As part of its response to the hack, Bybit has since announced plans to close some of its Web3 services as well as its non-fungible token (NFT) marketplace. The exchange has demonstrated some success in regaining market share post-hack, having recovered to its pre-incident market share of approximately 7%.
In a bid to locate the stolen funds, Bybit allocated over $2 million to bounty hunters who could provide information leading to the freezing of assets believed to be linked to the hack. As of mid-March, it was estimated that around 89% of the stolen $1.4 billion had been traceable.
Future of eXch and the Broader Crypto Landscape
The impending shutdown of eXch casts a shadow on the broader cryptocurrency landscape, which has faced ongoing scrutiny over security practices and regulatory compliance. The company’s decision to halt operations reflects ongoing concerns over the safety of digital assets and the integrity of exchanges operating in the volatile crypto environment.
As the industry continues to evolve, exchanges are urged to prioritize security measures to protect investors and assets from potential breaches and illegal activities. The situation will be closely monitored by regulators and industry stakeholders as the investigation into the hack and eXch’s alleged involvement continues.
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