The recent breach of Bybit has been labeled as the most significant cryptocurrency theft to date and has now taken a new turn.
eXch, a crypto exchange, is currently facing allegations of ties to North Korea’s Lazarus Group and being involved in laundering funds from the massive breach of $1.4 billion on 21 February.
Denial of Allegations by eXch Crypto Exchange
eXch has promptly refuted all accusations in a statement released on the Bitcointalk forum on 23 February. They firmly stated,
“We do not engage in money laundering for Lazarus/DPRK.”
The platform has assured its users that its services are intact, and all assets are secure.
While dismissing these allegations as fear and uncertainty, the exchange did acknowledge processing a small part of the funds related to the breach. They claimed this was an isolated occurrence.
eXch also mentioned that any transaction fees from these funds would be donated for public use.
Expectedly, the accusations against eXch escalated following the growing claims from blockchain experts and discussions on social media.
Backlash Faced by eXch Crypto Exchange
On 22 February, renowned on-chain analyst ZachXBT alleged that the exchange had assisted in laundering $35 million connected to the Bybit breach. He highlighted another incident where 34 Ethereum [ETH], valued at around $96,000, were mistakenly sent to another exchange’s hot wallet.
Supporting these assertions, blockchain security firm SlowMist noted substantial ETH conversions to other cryptocurrencies on eXch’s platform.
In addition, Nick Bax from the Security Alliance estimated that the exchange had handled approximately $30 million in transactions related to North Korea’s Lazarus Group.
Unsurprisingly, eXch has resisted Bybit’s attempts to freeze the remaining stolen assets associated with the breach.
In an exchange of emails with Bybit’s risk team, the exchange expressed dissatisfaction, claiming that Bybit had frozen its users’ funds in the past without valid justification.
“Why should we cooperate with an entity that has tarnished our standing previously?”
This history of unresolved conflicts seems to have contributed to eXch’s hesitance to comply with Bybit’s current demands, adding complexity to the ongoing dispute.
Measures Taken by Bybit CEO Ben Zhou
Despite the denial, Bybit CEO Ben Zhou has called for cooperation, emphasizing that the issue surpasses individual company interests.
“At this juncture, it is beyond specific entities; it concerns our collective stance towards hackers as an industry. Hopefully, @eXch will reconsider and aid us in preventing funds from leaving their platform.”
Zhou has pledged to explore all avenues to recover the stolen funds linked to the Lazarus Group cyberattack.
During a discussion on X Spaces on 22 February, Zhou outlined the exchange’s multifaceted approach, involving the initiation of a reward program, collaborating closely with law enforcement bodies, and working with the Ethereum Foundation to identify effective recovery methods.
This holistic strategy demonstrates Bybit’s commitment to protecting user funds and rebuilding trust in its platform.