Crypto exchange eXch has vehemently denied accusations of laundering $1.4 billion stolen in the February 21 Bybit hack for North Korea’s Lazarus Group. Addressing claims on Bitcointalk on February 23, the platform declared, “We are not laundering money for Lazarus/DPRK.” Meanwhile, eXch assured users that operations remain unaffected and all funds are secure.
The denial followed mounting scrutiny from blockchain investigators and social media users. However, the exchange later admitted a minor portion of the stolen funds passed through its systems. “An insignificant portion entered our address 0xf1da…1123,” the statement noted, pledging to donate associated fees to public initiatives.
What is the allegation?
On-chain investigator ZachXBT alleged on February 22 that eXch laundered $35 million for the Lazarus Group. Also, the exchange reportedly mishandled 34 ETH ($96,000), accidentally sending it to another platform’s hot wallet.
The security firm SlowMist flagged substantial ETH conversions on eXch, while Security Alliance member Nick Bax estimated $30 million in Lazarus-linked transactions.
eXch dismissed these claims as “misleading statements by amateur researchers.” Nevertheless, blockchain data revealed interactions between the hack’s wallets and eXch addresses. The exchange later locked its Bitcointalk thread for 72 hours, citing “false information” and harassment by “long-time haters of decentralised crypto.”
Bybit Suffers Historic $1.4 Billion Hack
The February 21 breach of Bybit’s Ethereum multisig cold wallet marks the largest crypto theft ever recorded. This was seen in Bybit’s total assets, which plummeted by $5.3 billion, including the stolen $1.4 billion, per DefiLlama. Despite this, the exchange continues processing withdrawals.
Bybit CEO Ben Zhou announced on February 23 that collaborative efforts froze $42 million of stolen funds. However, recovery efforts face hurdles as eXch resists freezing remaining assets. Zhou urged industry-wide cooperation, stating, “It’s about how we, as an industry, respond to hackers.”
eXch Clashes with Bybit Over Frozen Funds
Tensions escalated after eXch refused Bybit’s request to block stolen fund outflows. In a shared email, eXch criticised Bybit for allegedly freezing user deposits without explanation over the past year. “Why assist an organisation that undermined our reputation?” the exchange asked.
Conversely, Zhou appealed for unity, emphasising the need to prioritise industry integrity. Additionally, eXch accused Bybit of exploiting the hack to tarnish its reputation, calling itself “the last centralised, non-KYC exchange that doesn’t scam users.”
eXch Vows to Donate Fees
While denying systemic laundering, eXch pledged to redirect fees from the isolated transaction to privacy and security initiatives. “This attack highlights why decentralised protocols like Bisq are vital,” the exchange argued. It also urged Etherscan to retract a “community note” linking it to the hack.
Despite the controversy, eXch maintains its commitment to user privacy. Meanwhile, Bybit collaborates with Interpol and regulators to trace stolen assets. The standoff underscores broader debates over accountability in decentralised ecosystems and the role of non-KYC platforms.
