Crypto exchange eXch has strongly denied allegations of laundering $1.4 billion in funds stolen from Bybit in what has been described as the largest crypto theft in history. The exchange insists it has no ties to North Korea’s Lazarus Group, the hacking syndicate allegedly behind the heist.
eXch Responds to Accusations
In a Feb. 23 statement on the Bitcointalk forum, eXch refuted claims that it facilitated money laundering for Lazarus/DPRK. The exchange asserted that its funds are secure, operations remain unaffected, and accusations against it are misinformation aimed at spreading fear, uncertainty, and doubt (FUD).
However, eXch admitted to processing a small portion of the hacked funds, clarifying:
“The insignificant portion of funds from the Bybit hack eventually entered our address 0xf1da173228fcf015f43f3ea15abbb51f0d8f1123, which was an isolated case and the only part processed by our exchange, fees from which we will donate for the public good.”
eXch also emphasized that no other addresses on the Ethereum blockchain are linked to the exchange beyond standard deposit addresses.
Onchain Analysts Dispute eXch’s Claims
Despite eXch’s rebuttal, blockchain investigators continue to challenge its stance. ZachXBT, a well-known onchain sleuth, alleged in a Feb. 22 Telegram post that eXch had laundered $35 million of Bybit’s stolen funds and had even mistakenly sent 34 ETH (~$96,000) to a hot wallet belonging to another exchange.
Other security firms, including SlowMist, have also accused eXch of converting a significant amount of ETH from the hack into other cryptocurrencies. Nick Bax, a member of the Security Alliance, estimated that eXch processed over $30 million for DPRK-linked addresses on the same day.
Bybit’s Struggles to Freeze Stolen Funds
Bybit has been actively working to recover stolen assets and freeze illicit funds. In a Feb. 23 update, the exchange reported that over $42 million of the stolen funds had been successfully frozen through coordinated industry efforts.
However, eXch has seemingly refused to cooperate. In a response to Bybit’s risk team, which requested that it freeze stolen funds, eXch pointed to past grievances, claiming Bybit had previously frozen its users’ funds without explanation.
“In light of these circumstances, we would appreciate a clear explanation as to why we should consider providing assistance to an organization that has actually undermined our reputation,” eXch wrote in a forum post.
Bybit CEO Calls for Industry Unity
Bybit CEO Ben Zhou weighed in on the controversy, expressing hope that eXch would reconsider its stance.
“At this point, it’s really not about Bybit or any entity; it’s about our general approach toward hackers as an industry,” Zhou stated, emphasizing the need for collective action against cybercriminals.
What This Means for Crypto Security
This dispute highlights the ongoing challenges in crypto security, particularly regarding exchange compliance and laundering prevention. While some exchanges cooperate in tracking and freezing stolen funds, others resist efforts, citing past disputes and operational independence.
With Bybit’s total assets dropping by $5.3 billion since the hack, the industry is now at a critical juncture, whether to prioritize collaboration in fighting crypto crime or risk creating safe havens for illicit actors.
As the dust settles, the global crypto community will be watching closely to see if eXch chooses to align with security efforts or remain defiant.
