As soon as a go-to swapper for hackers and drainers, eXch was shut down by German police in April — however continued exercise suggests the story isn’t over.
With out Know Your Buyer (KYC) checks, eXch wasn’t your typical crypto change. It acted extra like an prompt swapper, permitting dangerous actors and cybercriminals to fly beneath the radar for years.
Amongst its purchasers was the Lazarus Group. The North Korean state-backed hacking unit thrust eXch into the highlight again in February, when it used the platform to funnel a number of the $1.4 billion it stole from Bybit. When Bybit traced its stolen funds to eXch, it requested help — however the platform refused.
This led to a fierce dialogue over privateness versus safety, however in the end, eXch introduced it will shut its doorways on April 17; on April 30, German authorities made it official.
However in accordance with safety agency TRM Labs, the platform might have continued working in stealth mode after the takedown. Right here’s the rise, fall and afterlife of alleged crypto laundromat eXch.
eXch shuts entrance door, retains again door unlocked
Alongside its shutdown announcement, eXch posted a message claiming it will not facilitate felony proceeds. The publish was eliminated inside hours, and operations quietly resumed — indicators of an inner disagreement or even perhaps a calculated try and decrease visibility, in accordance with TRM.
German authorities seized eXch’s servers and confiscated 34 million euros ($38 million) in crypto, together with greater than eight terabytes of knowledge, successfully dismantling its public-facing infrastructure.
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“Similar to we noticed with Garantex rebranding as Grinex, eXch didn’t absolutely die after the shutdown. It quietly stored servicing a handful of companions through API, which meant laundering exercise continued even after the general public takedown,” stated Jeremiah O’Connor, co-founder and chief expertise officer of safety agency Trugard.
O’Connor added that it’s not unlikely for such platforms to serve loyal clients even after seizures.
“The folks behind eXch.ch took full benefit of working throughout a number of nations. The area was registered by way of a UK-based supplier, listed Switzerland as an admin location, hosted infrastructure in France, and had servers seized in Germany,” O’Connor stated.
It’s nonetheless unclear if eXch will kill its API or come again beneath a brand new title. TRM stated within the Could 2 weblog publish that the platform’s remaining back-end entry continued to supply anonymization infrastructure for risk actors.
No KYC, pooled liquidity attracts illicit funds to eXch
EXch’s origins hint again to 2014, in accordance with “Fantasy,” lead investigator at crypto insurance coverage agency Fairside Community. In an October 2024 investigation, Fantasy recognized the platform’s first public look as a BitcoinTalk discussion board account selling computerized swaps between Bitcoin (BTC), Excellent Cash and BTC-e vouchers — cost strategies generally related to high-risk transactions.
Fantasy additionally traced the unique Bitcoin pockets tied to eXch and located it was seemingly funded through BTC-e, the now-defunct crypto change shuttered by US authorities in 2017 for its position in laundering felony proceeds.
Fantasy’s forensic analysis discovered that the modernized type of eXch emerged in 2022, when its Ethereum scorching pockets was first funded. Not lengthy after, it turned a hub for outstanding crypto drainers.
Monkey Drainer — the primary recognized large-scale drainer-as-a-service operator — used eXch earlier than its retirement. Different draining service suppliers like Pink Drainer and Inferno Drainer additionally handed funds by way of the platform, together with a number of main exploiters.
EXch required no id verification, permitting customers to maneuver funds with anonymity. That made it a pretty instrument for cybercriminals trying to clear stolen property.
“EXch managed to remain energetic for years — regardless of facilitating apparent illicit exercise — as a result of there’s nonetheless an enormous hole between what regulators ‘can’ do and how briskly expertise is shifting,” Amit Levin, former investigator at Binance, advised Cointelegraph.
“In immediately’s world, anybody can launch a wise contract or run a crypto service from anyplace, usually with out revealing who they’re. And if there’s no registration, no KYC and nobody to carry accountable, enforcement turns into near unattainable.”
The platform additionally drew confidence from risk actors by utilizing a pooled liquidity system that blended consumer deposits and withdrawals, making it tough for investigators and legislation enforcement to hint the move of funds.
When eXch knew and did nothing
EXch denied laundering funds for North Korean crypto hackers, and in its shutdown discover, it framed the mission as an try by privateness lovers to “restore stability” within the trade. It criticized Anti-Cash Laundering enforcement and condemned firms providing handle threat scoring APIs as “parasites” profiting off authorities worry.
“Service suppliers within the crypto area are, for probably the most half, not decentralized; that’s, they keep management over or entry to clients’ property, as demonstrated within the case of eXch,” Gal Arad Cohen, associate at S. Horowitz & Co, advised Cointelegraph.
“A monetary middleman working within the crypto sector faces dangers much like these of conventional monetary service suppliers and may, due to this fact, be held to equal requirements and regulatory necessities,” she stated.
The closure of eXch is a “big win” for crypto, in accordance with Alex Katz, CEO of safety agency Kerberus. Nevertheless, Katz warned that dangerous actors can migrate to various initiatives, like THORChain, which acquired a shoutout in eXch’s unapologetic farewell manifesto.
Within the Bybit hack, decentralized swap protocol THORChain was used as the primary bridge to swap round 500,000 Ether (ETH) to Bitcoin.
EXch said that its companions would retain entry to its API for a restricted time, however future operations would rely on the “new administration staff.” The previous staff beneficial establishing new liquidity swimming pools to take care of seamless performance and stated it will present consultations.
It signed off with a defiant message: “Privateness isn’t a criminal offense.”
German authorities reported that $1.9 billion in crypto flowed into eXch since its inception. Its operators are suspected of business cash laundering and operating a felony buying and selling platform.
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