ZachXBT: Instant market eXch had $38M and infrastructure seized by law enforcement

The no-KYC instant market eXch had $38M seized, along with the remaining technical infrastructure of the exchange. On-chain investigator ZachXBT pointed to the ongoing investigation by German authorities. 

The instant exchange eXch had $38M and all technical infrastructure seized by the German authorities. On-chain investigator ZachXBT noted the exchange had its assets seized after the decision to stop operations from May 1. 

The eXch team previously explicitly refused to freeze ETH funds coming from Bybit, citing previous reputation damage, as well as the blacklisting of funds originating from eXch addresses. The market operator claimed its no-KYC approach was a drive for privacy, and not a deliberate attempt at money-laundering.

The exchange was not closed due to a law enforcement request, but by the decision of its management. After that, there were repots that the exchange still handled swaps through its API. Previously, eXch has hinted at a new management and a potential relaunch, but its Bitcointalk thread has gone silent since May 3.

ZachXBT reminded that eXch was used to launder hundreds of millions from the Bybit hack in February. The market operator was also the destination of funds from previous large-scale hacks, including the Multisig Hack, the FixedFloat exploit, as well as up to $234M from the Genesis Creditor theft. The market operator also accepted funds from wallet drainers, and refused to cooperate and block addresses or orders. 

The asset seizure may help with fund recovery. The market operator was also accused of continuing its services, despite the order to cease all operations from May 1. As more crypto operators strive to be compliant, eXch was one of the few remaining no-KYC markets. 

German authorities seized eXch servers

The eXch market operator had its servers seized by the Frankfurt am Main Public Prosecutor’s office unit for combatting internet crime, and the Federal Criminal Police office. The servers carried the site’s infrastructure, available under the exch.cx domain and other locations. 

German authorities now control wallets for BTC, ETH, LTC, and DASH, valued at around $38M as of April 30, and even more after the recent crypto market rally. This is the third-largest confiscation of crypto assets in the history of the German BKA office. 

The Criminal Police actions anticipated attempts by the founders of eXch to abscond with the wallets, leaving depositors with losses. 

“Crypto swapping is an essential component of the underground economy, used to conceal incriminated funds from illegal activities such as hacking or trading in stolen payment card data, thus making them available to perpetrators,” said Dr. Benjamin Krause, Chief Public Prosecutor at the Central Intelligence Agency (ZIT). 

The main concern for eXch is that it was widely considered a money-laundering platform, used also by dark net sellers. 

The seized assets are the first significant inflows into the German Government crypto reserves. Previously, the government sold all seized BTC at a price of around $50,000. The current reserves of eXch, however, may be linked to the losses of Bybit users and returned as compensation.

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