- 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 called the largest crypto theft in history and now, it has taken yet another twist.
Crypto exchange eXch now finds itself under scrutiny after some allegations linked it to North Korea’s Lazarus Group. In fact, it has been accused of laundering funds from the massive $1.4 billion breach on 21 February.
eXch crypto exchange denies allegations
Responding swiftly, eXch denied all allegations in a statement posted on the Bitcointalk forum on 23 February. It asserted,
“We are not laundering money for Lazarus/DPRK.”
The platform reassured users that its operations remain unaffected and all funds are secure.
While dismissing these claims as fear, uncertainty, and doubt (FUD), the exchange did however admit to processing a “small portion” of funds tied to the hack. According to the exchange, this was an isolated incident.
eXch went on to add that any transaction fees from these funds will be donated for public benefit.
As expected, the allegations against eXch intensified following mounting accusations from blockchain investigators and social media discussions.
eXch crypto receives backlash
On 22 February, renowned on-chain analyst ZachXBT alleged that the exchange had facilitated the laundering of $35 million linked to the Bybit hack. He highlighted a separate incident where 34 Ethereum [ETH], valued at roughly $96,000, were mistakenly transferred to another exchange’s hot wallet.
Supporting these claims, 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 had processed nearly $30 million in transactions connected to North Korea’s Lazarus Group.
Needless to say, eXch has notably resisted Bybit’s efforts to freeze the remaining stolen assets tied to the hack.
In an email exchange with Bybit’s risk team, the exchange voiced frustration, alleging that Bybit had previously frozen its users’ funds without providing sufficient justification.
“Why should we assist an organization that has previously undermined our reputation?”
This history of unresolved disputes appears to have fueled eXch’s reluctance to comply with Bybit’s current requests, adding another layer of complexity to the ongoing controversy.
Efforts undertaken by Bybit CEO Ben Zhou
Despite this denial, however, Bybit CEO Ben Zhou called for collaboration, stressing that the issue extends beyond 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.”
In fact, Zhou committed himself to exhausting every possible route to recover the stolen funds tied to the Lazarus Group hack.
During a discussion on X Spaces on 22 February, Zhou detailed the exchange’s multi-faceted strategy. This involves launching a bounty program, working closely with law enforcement agencies, and collaborating with the Ethereum Foundation to identify effective recovery solutions.
This comprehensive approach reflects Bybit’s determination to safeguard user assets and restore confidence in its platform.
