German police shutter crypto anonymiser tied to Bybit hack and seize $38m

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In the latest round of fallout from the recent $1.5 billion hack of Bybit, German law enforcement authorities seized $38 million from a crypto swapping platform on Friday, according to officials.

They also effectively shut down the nine-year-old venture, eXch, which let users anonymise crypto transactions.

Authorities say that eXch is suspected of processing funds from some of the largest crypto thefts in recent years.

This includes an unspecified amount of funds from the $1.5 billion Bybit hack, which has been linked to North Korea’s Lazarus Group, according to the Federal Criminal Police Office and Frankfurt’s Central Office for Combating Cybercrime.

Final message

The police action came just days after eXch announced it would be shutting down voluntarily, citing pressure from law enforcement.

In a final message to users, the platform said it was “not liable for any misuse” and emphasised that it had “never had any goals to serve criminals.”

The eXch platform allowed users to swap a wide range of digital assets without identity verification, making it an attractive option for those looking to obscure the origins of their funds.

The platform framed its service as a supporter of financial sovereignty, signing off its shutdown notice with the statement: “Privacy is not a crime.”

But as with other privacy-focused platforms like Tornado Cash, this model can blur the lines between providing legitimate financial autonomy and enabling criminal anonymity.

Illicit web of funds

Research from blockchain investigator ZachXBT showed eXch’s role in laundering hundreds of millions of dollars in stolen crypto, including funds from the Bybit hack, Multisig hack, FixedFloat exploit, the $243 million Genesis creditor theft, and numerous phishing drainer services.

And according to TRM Labs, which also confirmed the platform of having links to Bybit hack money laundering, eXch remained active even after its shutdown announcement, with its API continuing to process transactions linked to illicit activity.

The analytics firm also identified the platform as a primary destination for funds linked to child sexual abuse material, with more than $300,000 in such transactions traced to it.

Will Germany sell?

Now the question is what the German government will do with the seized funds.

Coming about a year after confiscating 50,000 Bitcoin worth around $2.2 billion from darknet platforms, this was the third-largest crypto confiscation by German authorities.

In the prior case, German officials promptly moved to sell the seized Bitcoin.

This massive sell-off rattled crypto markets in May and June and saw Bitcoin’s price fall over 20% to $56,000 in that time.

But by the end of the year, Germany became the object of ridicule in crypto circles after it missed out on raking in billions in potential gains as Bitcoin soared past $100,000.