eXch Denies Laundering Accusations

Overview

• eXch denied laundering accusations, but admitted to processing a small portion of hacked Bybit funds.
• Bybit is pursuing fund recovery through bounties, law enforcement, and Ethereum Foundation collaboration.

The recent Bybit hack is being referred to as the largest crypto theft in history, and it has taken yet another twist.

Crypto exchange eXch is now under scrutiny following allegations linking it to North Korea’s Lazarus Group. The exchange is accused of laundering funds from the massive $1.4 billion breach on February 21.

eXch Denies Allegations

In a statement posted on the Bitcointalk forum on February 23, eXch denied all allegations, stating:
> “We are not laundering money for Lazarus/DPRK.”
The platform reassured users that its operations remain unaffected and all funds are secure.

eXch dismissed these claims as fear, uncertainty, and doubt (FUD), but did admit to processing a “small portion” of funds tied to the hack. They specified that this was an isolated incident, adding that any transaction fees from these funds would be donated for public benefit.

As expected, accusations against eXch intensified following claims from blockchain investigators and discussions on social media.

Backlash Faced by eXch

Renowned on-chain analyst ZachXBT alleged on February 22 that the exchange facilitated the laundering of $35 million linked to the Bybit hack. He also highlighted an incident involving 34 Ethereum (ETH), valued at approximately $96,000, that were mistakenly transferred to another exchange’s hot wallet.

Supporting these allegations, blockchain security firm SlowMist reported significant ETH conversions into other cryptocurrencies on eXch’s platform.

Additionally, Nick Bax from the Security Alliance estimated that the exchange processed nearly $30 million in transactions linked to North Korea’s Lazarus Group.

eXch has notably resisted Bybit’s efforts to freeze the remaining stolen assets related to the hack. In communication with Bybit’s risk team, eXch expressed frustration, alleging that Bybit previously froze its users’ funds without sufficient justification, saying:
> “Why should we assist an organization that has previously undermined our reputation?”

This history of unresolved disputes seems to have fueled eXch’s reluctance to comply with Bybit’s current requests, complicating the ongoing controversy.

Bybit’s Recovery Efforts

Despite eXch’s denials, Bybit CEO Ben Zhou has called for collaboration, emphasizing that the issue is broader than the interests of individual firms:
> “At this point is really not about bybit or any entity, it’s about our general approach towards hackers as an industry, really hope that @eXch can reconsider and help us to block funds outflowing from them.”
Zhou committed to exhausting every possible route to recover the stolen funds linked to the Lazarus Group hack.

During a discussion on X Spaces on February 22, Zhou outlined Bybit’s multi-faceted recovery strategy, which includes launching a bounty program, working closely with law enforcement, and collaborating with the Ethereum Foundation to find solutions. This comprehensive approach reflects Bybit’s determination to safeguard user assets and restore confidence in its platform.