Privacy-Focused Exchange eXch Announces Shutdown Amid Allegations of Money Laundering

Privacy-focused cryptocurrency exchange eXch has announced it will cease operations on May 1, following allegations that it was involved in laundering funds stolen during the $1.5 billion Bybit hack. The announcement was made on April 17, with the eXch team citing pressure from an international investigation targeting its operations and key personnel.

Allegations of Money Laundering and Terrorism

In its statement, the Czech-based exchange emphasized that it was created as a privacy experiment and had no financial motives or intent to facilitate illicit activities. Despite being labeled a “mixer” by some critics, the team clarified that eXch is a privacy-focused instant exchange, distinct from traditional coin mixers.

According to the eXch team, intelligence from sources within the “state intelligence sector” confirmed its inclusion in investigations related to laundering stolen crypto assets. While eXch initially denied involvement in processing funds from the Bybit hack, it later admitted to handling a “small portion” of the stolen assets.

Blockchain Analytics Firms Flag eXch

Blockchain analytics firms, including Elliptic and TRM Labs, identified eXch as a significant player in the laundering process following the February 21 exploit. The Bybit hack resulted in the theft of approximately 401,000 Ethereum from the exchange’s cold wallet. Reports suggest the Lazarus Group, a hacking syndicate linked to North Korea, used decentralized exchanges, cross-chain bridges, and privacy tools—such as eXch—to obscure the origins of the stolen funds.

Criticism of Centralized Exchanges

In its shutdown notice, eXch criticized centralized exchanges for implementing policies it described as “nonsensical” and ineffective at preventing money laundering. The team reiterated its commitment to defending user privacy and announced the creation of a fund to support privacy-enhancing projects. The fund, totaling 50 Bitcoin, will be directed toward open-source initiatives within the Bitcoin and Ethereum ecosystems.

Key Points from eXch’s Announcement

  • The exchange will officially shut down on May 1.
  • A 50 Bitcoin fund will be established to support privacy-focused projects.
  • eXch’s API will remain temporarily available to partners during the transition period.
  • The exchange reaffirmed its stance that privacy is not a crime.

Impact on the Crypto Industry

Despite its closure, eXch warned that shutting down its platform would not eliminate illicit activity in cryptocurrency markets. In its statement, the team argued that targeting eXch does little to prevent global money laundering and emphasized the importance of privacy in the digital age.

“The goal of stopping eXch under the belief that it may stop all money laundering in the world is ridiculous,” the exchange stated.

As the crypto industry continues to grapple with balancing privacy and compliance, eXch’s shutdown highlights the challenges faced by privacy-focused platforms operating in a highly scrutinized environment.

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