eXch Caught in Crypto Crime Allegations—Bybit Hack Connection?

Blockchain detective ZachXBT was the first to raise the alarm. His research showed that the hackers behind the Bybit breach transferred 5,000 ETH (~$135 million) to a fresh wallet, before channeling funds through eXch.

Other cybersecurity analysts soon backed his claims, including the experts at SlowMist. Meanwhile, Nick Bax from the Security Alliance white-hat hacker group confirmed at least $30 million in laundered assets. 

Given the significant amount of ETH already laundered through eXch into BTC, XMR, etc., platforms should tighten risk controls on any funds coming from there,

advised SlowMist.

In the wake of Bybit’s record-breaking February 21, 2025 hack, the exchange has called on centralized platforms to freeze suspicious transactions—so far, over $42 million has been locked down.

eXch Denies Allegations, But Admits Handling Some Stolen Funds

eXch hit back at accusations of laundering stolen funds, posting a statement on BitcoinTalk. The exchange dismissed ZachXBT’s claims as misinformation, asserting that the flagged transactions had no links to their platform.

However, they acknowledged processing a small amount of the hackers’ funds, claiming they had donated the fees to charity. Curiously, before this, eXch had denied Bybit’s request to freeze the stolen funds, citing past disputes over user asset restrictions.

At this point is really not about bybit or any entity, it's about our general approach towards hackers as an industry, really hope that eXch can reconsider and help us to block funds outflowing from them. We are also getting help from Interpool and international regulatory bodies, helping block these funds is not just helping bybit,

Bybit CEO Ben Zhou commented.

Amid mounting scrutiny, eXch shut down its BitcoinTalk discussion, arguing that misinformation was spiraling out of control.

The exchange stood firm in its denial, dismissing the accusations as a “witch hunt” fueled by its refusal to implement mandatory KYC policies.

To highlight what it sees as hypocrisy, eXch pointed to THORChain, which allegedly processed more fraudulent transactions yet faced no similar backlash.

Our respect for ZachXBT has diminished over time due to his repeated inaccuracies, but today marks a clear point where he has proven himself to be toxic, incompetent, and generally untrustworthy. We urge the community to verify information from credible sources and to approach claims made by civilians like ZachXBT with caution,

the eXch team stated.

How the Market is Reacting

Even as the eXch controversy unfolds, Bybit users aren’t hesitating to withdraw their funds. The exchange is keeping up with the demand, with any delays reportedly due to technical issues rather than liquidity concerns.

Bybit’s crisis management has earned positive reviews from analysts, but the real test will come if the platform faces significant financial pressure. If Bybit continues processing withdrawals without freezing funds, it will only reinforce its reputation as a top-tier exchange.

Meanwhile, odd institutional transactions are catching attention. Binance has been shuffling large amounts of ETH and SOL to market makers, sparking speculation. Some believe it’s a sign of liquidation, while others insist it’s just standard exchange operations—redistributing assets between wallets to maintain liquidity.

Related: ZachXBT: The Blockchain Researcher and Crypto Detective

The eXch debacle is yet another reminder of the crypto industry’s ongoing identity crisis—a tug-of-war between privacy advocates and regulators pushing for stricter compliance.

Even if eXch played no role in laundering funds, past cases suggest that regulators will eventually force KYC implementation, as they have with every major non-compliant exchange.

It’s no longer a matter of if, but when eXch will be next in line.

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