In a significant crackdown on cryptocurrency laundering, German law enforcement has seized 34 million euros (approximately $38 million) from eXch, a cryptocurrency platform allegedly involved in facilitating the transfer of stolen assets during the record-breaking $1.4 billion hack of Bybit. This operation marks the German Federal Criminal Police Office (BKA) and Frankfurt’s main prosecutor’s office’s third-largest confiscation of cryptocurrency in history, highlighting the urgent need for regulatory oversight in the rapidly evolving digital finance landscape.
The seizure, announced on May 9, involved multiple crypto assets, including Bitcoin (BTC), Ether (ETH), Litecoin (LTC), and Dash (DASH). In addition to the frozen assets, law enforcement authorities also shut down eXch’s operations and seized its server infrastructure, which contained over eight terabytes of data.
eXch’s Non-compliance with AML Regulations
The BKA described eXch as a “swapping” service that allowed users to exchange various cryptocurrencies without implementing critical Anti-Money Laundering (AML) measures. Since its inception in 2014, eXch has facilitated approximately $1.9 billion in crypto transfers, with a portion of those transactions believed to be linked to criminal activities, including the funds laundered during the Bybit hack.
The seizure comes amid growing concerns surrounding the use of cryptocurrency platforms for illegal purposes. Authorities assert that a segment of the $1.5 billion stolen from Bybit on February 21, 2025, was further exchanged via eXch, revealing the platform’s troubling connections to wider money laundering operations.
Connections to Other Major Crypto Theft Cases
Crypto analyst ZachXBT has linked eXch to several high-profile crypto thefts and exploits, including Multisig, FixedFloat, and the $243 million theft related to Genesis creditors. Furthermore, the platform has been implicated in numerous phishing scams and failed to take action against known illicit addresses.
Following the Bybit hack, ZachXBT was one of the first investigators to reveal eXch’s involvement, noting that the Lazarus Group had transferred 5,000 ETH from the hack to a new wallet before laundering the funds through eXch.
Termination of Services Amid Regulatory Pressures
Following initial denials of involvement in laundering activities, eXch announced plans to cease operations by May 1, as stated in a post on Bitcoin Talk. The announcement cited the hostile environment surrounding the platform and the difficulty in operating amid growing scrutiny from regulatory bodies.
As Benjamin Krause, a senior prosecutor, noted, it is crucial to act against systems that facilitate quick and anonymous money laundering, as these play an essential role in the underground economy. He underscored that crypto swapping services often mask illicit funds, thus enabling illegal activities to continue unabated.
The seizure of eXch’s assets serves as a stark reminder of the necessity for stricter regulatory frameworks in the cryptocurrency sector. As the digital currency landscape continues to evolve, so too must the approaches to governance, compliance, and enforcement.
