Cryptocurrency exchange eXch has announced that it will cease operations on May 1, 2025, following allegations of laundering $35 million tied to North Korea’s Lazarus Group in the $1.4 billion Bybit hack. The platform admitted to processing a small portion of the stolen funds, which has sparked global concern.
Events Leading to the Decision
On February 21, 2025, Bybit suffered a historic $1.4 billion hack, with North Korea’s Lazarus Group identified as the culprit. The hackers exploited a flaw in Bybit’s Ethereum cold wallet during a routine transfer, using malware to manipulate the transaction and siphon off over 400,000 ETH. Within days, $160 million was laundered through various platforms, including eXch, a non-KYC exchange that allows anonymous trading.
Blockchain sleuth ZachXBT and firms like Elliptic and SlowMist accused eXch of processing $35 million of the stolen funds, with some converted to Bitcoin and other digital currencies. The platform initially denied the allegations, claiming it handled an “insignificant” amount, but later blacklisted suspected addresses after pressure from Bybit.
The Lazarus Group is known for sophisticated laundering via mixers and decentralized exchanges. eXch refused to fully cooperate, citing a prior dispute with Bybit, which fueled scrutiny, leading to its closure announcement on April 17, 2025, amid an international investigation.
Impact of the Scandal
The eXch shutdown is disturbing to the crypto industry, since it highlights vulnerabilities in non-KYC platforms. Bybit froze $42 million of stolen funds and launched a bounty program, but $1.2 billion remains missing, shaking user trust. Over 580,000 withdrawals worth $4 billion hit Bybit post-hack, though it secured loans to stay solvent.
The incident, dubbed “TraderTraitor” by the FBI, reveals North Korea’s cybercrime prowess, with funds reportedly fueling its military programs. Regulatory pressure is mounting, potentially tightening rules for crypto platforms. eXch’s closure, driven by allegations and increased surveillance, warns platforms prioritizing privacy over compliance.
The crypto market faces heightened skepticism, with experts urging stronger security and global cooperation to combat sophisticated hacks, as investor confidence wanes in an already volatile sector.
