Frankfurt authorities seize $38.2m from eXch due to money laundering allegations

Frankfurt authorities have suspended operations for eXch and seized its crypto assets valued $38.2 million. The platform allegedly facilitated money laundering for major crypto heists including the Bybit and Multisig hacks.

According to an official statement issued on May 9, the Frankfurt Prosecutor’s Office announced it had shut down the crypto exchange platform, seizing an array of crypto assets worth 34 million euros or equal to $38.2 million. These assets consisted of a mix of Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Dash (DASH).

The prosecutor’s office dubbed it the “third-largest seizure of crypto assets in the history of the BKA.” Authorities accused the team behind the platform of commercial money laundering and operating a criminal trading platform.

According to renowned crypto investigator ZachXBT, the platform was used to launder hundreds of millions of funds from some of the largest crypto hacks in history.

It was allegedly used to launder funds from the $1.5 billion Bybit hack, the $1.4 billion Multisig hack, the FixedFloat exploit, and the theft of around $243 million from Genesis Creditor, as well as various phishing scams over the past few years.

The internet sleuth claimed the platform had repeatedly refused to block addresses and freeze orders related to these hacks.

Director of the Federal Criminal Police Office and Head of the Cybercrime Division, Carsten Meywirth has confirmed that the bureau has secured “a record-breaking sum of millions in incriminating cryptocurrencies” as well as effectively shut down the platform.

“We will continue to increase the risk of loss for the underground economy with all the means at our disposal. Our goal remains to hold those responsible accountable,” said Meywirth.

How did eXch allegedly launder hacking funds?

eXch is known as a crypto exchange service that allowed customers to swap between crypto assets easily. It was made accessible on both the public web as well as the dark web. In fact, it has been specifically marketing itself on sites linked to the criminal underground.

It appealed to dark web operators because unlike most crypto exchange platforms, it did not abide to anti-money laundering measures. This meant that users did not have to identify themselves or submit Know-Your-Customer verification. The platform also claimed it does not store user information.

Therefore, the platform made it particularly increasingly easy for users to cover their financial tracks. Since it was established in 2014, the platform has facilitated around $1.9 billion worth of crypto transactions. Authorities suspect the platform has been accepting Bitcoin originating from illegal activity.

Not only that, the Frankfurt law enforcement have found evidence that the platform may have been used to launder a portion of the $1.5 billion of stolen funds from the Bybit hack.

On Feb. 21, crypto exchange Bybit suffered one of the largest exploits in the web3 space. The hackers were able to extract around $1.46 billion from Bybit’s ETH cold wallet. According to Bybit CEO Ben Zhou, nearly 30% of the funds stolen from Bybit can no longer be tracked. Meanwhile, he believes as much as 84.5% have been converted to Bitcoin via cross-chain liquidity protocol THORchain.