The privacy-focused exchange eXch is set to discontinue its services on May 1 following mounting accusations of its involvement in laundering funds linked to the $1.5 billion Bybit hack.
In a statement released on the Bitcoin Forum on April 17, the eXch team noted that the project had come under scrutiny as part of a “transatlantic operation” aimed at dismantling it and potentially prosecuting prominent figures for offenses related to money laundering and terrorism.
Headquartered in the Czech Republic, eXch, recognized for its relaxed know-your-customer (KYC) protocols, emphasized that it was created as a privacy experiment without any financial motivations. The team asserted that it never aimed to facilitate unlawful activities. Although often labeled a “mixer,” the team clarified that its operations are those of a privacy-centric instant exchange and not comparable to a traditional coin mixer.
The team reported receiving intelligence from contacts within the “state intelligence sector,” which confirmed its engagement in ongoing inquiries concerning the laundering of cryptocurrency assets.
Previously, the exchange denied claims of laundering funds from the Bybit breach, initially dismissing assertions that it aided North Korea’s Lazarus Group. However, it later admitted that it had processed a “small portion” of the breached assets.
Blockchain analytics companies, such as Elliptic and TRM Labs, have identified eXch as a key participant in the money laundering activities. Following the incident on February 21 that siphoned approximately 401,000 Ethereum (ETH) from Bybit’s cold wallet, the Lazarus Group employed a network of decentralized exchanges, cross-chain bridges, and privacy solutions, including eXch, to obscure the provenance of the stolen assets.
In its shutdown announcement, eXch criticized centralized exchanges for implementing “nonsensical policies” that fail to effectively address money laundering. The exchange reiterated its dedication to protecting user privacy and announced the establishment of a fund of 50 Bitcoin (BTC) to support open-source projects that enhance privacy within the Bitcoin and Ethereum ecosystems.
Despite its forthcoming closure, eXch warned that terminating its platform would not eliminate illicit activities in the cryptocurrency arena. “The notion that shutting down eXch will put an end to all worldwide money laundering is ludicrous,” stated the announcement.
eXch’s API will remain available to partners for a limited time while a new management team evaluates the final transition of the platform. “Privacy is not a crime,” the statement concludes.
