Key Points

• eXch crypto exchange denies allegations of laundering funds from the Bybit hack, but admits processing a small portion of the stolen funds.
• Bybit is working on recovering the funds through various means, including bounties, law enforcement, and collaboration with the Ethereum Foundation.

The recent Bybit hack, deemed the largest crypto theft in history, is taking a new turn.

Crypto exchange eXch is currently under scrutiny after allegations linked it to North Korea’s Lazarus Group. It’s been accused of laundering funds from the $1.4 billion breach on 21 February.

eXch Responds to Allegations

eXch swiftly denied all allegations in a statement posted on the Bitcointalk forum on 23 February. The exchange reassured users that its operations remain unaffected and all funds are secure.

Despite dismissing these claims as fear, uncertainty, and doubt (FUD), eXch did admit to processing a “small portion” of funds tied to the hack, calling it an isolated incident. The exchange promised to donate any transaction fees from these funds for public benefit.

However, allegations against eXch intensified with mounting accusations from blockchain investigators and social media discussions.

Allegations and Backlash

On 22 February, on-chain analyst ZachXBT claimed that eXch had facilitated the laundering of $35 million linked to the Bybit hack. He also highlighted a separate incident where 34 Ethereum (ETH), valued at roughly $96,000, were mistakenly transferred to another exchange’s hot wallet.

Blockchain security firm SlowMist and Nick Bax from the Security Alliance supported these claims, reporting significant ETH conversions into other cryptocurrencies on eXch’s platform and estimating that the exchange had processed nearly $30 million in transactions connected to North Korea’s Lazarus Group.

Despite these allegations, eXch has resisted Bybit’s efforts to freeze the remaining stolen assets tied to the hack. eXch voiced frustration in an email exchange with Bybit’s risk team, alleging that Bybit had previously frozen its users’ funds without providing sufficient justification.

Bybit’s Recovery Efforts

Despite eXch’s denial, Bybit CEO Ben Zhou called for collaboration, stressing that the issue is about the industry’s general approach towards hackers. Zhou is committed to exhausting every possible route to recover the stolen funds tied to the Lazarus Group hack.

In a discussion on X Spaces on 22 February, Zhou detailed Bybit’s multi-faceted strategy. This includes 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.