Ethereum Trading Volume Spikes Amid $1.4B Bybit Hack Investigation

February 24, 2025 by Bena Ilyas

• eXch, a no-KYC exchange, experienced a 900% surge in Ethereum reserves amid allegations of laundering funds from the $1.4B Bybit hack.
• Significant fund movements were traced to North Korea’s Lazarus Group, sparking concerns over decentralized exchanges.
• Bybit and security firms called for stricter risk controls, while eXch denied systemic wrongdoing and pledged donations to privacy-focused initiatives.

The Lazarus Group, a notorious cybercriminal collective widely believed to be sponsored by North Korea, is reportedly laundering funds from the staggering $1.4 billion Bybit hack. However, the non-KYC centralized exchange eXch has strongly denied accusations that it is facilitating illicit transactions, sparking debate over decentralization, privacy, and regulatory scrutiny in the crypto space.

In a statement on Bitcointalk, eXch pushed back against allegations of money laundering, stating, “We are not laundering money for Lazarus/DPRK. The opposite opinion is solely a perspective of some people that wish decentralized coins’ fungibility and on-chain privacy to vanish long-time haters of decentralized crypto in general.”

Despite eXch’s rebuttal, blockchain analysts have flagged substantial fund movements from wallets linked to the Bybit exploit into eXch’s platform. Nick Bax, a member of the Security Alliance (SEAL) group, posted on X, “By my estimate, eXch did about $30M of volume for DPRK today. Curious to see how long they can keep this up.”

No-KYC Exchange eXch Sees 900% Ethereum Spike

Other analysts have echoed similar concerns. Vxdb, a well-known blockchain investigator, highlighted a massive surge in Ethereum trading on eXch, stating, “Exch[.]cx, a no-KYC exchange, has recorded an abnormal spike in ETH volume 20K Ethereum in the past 24 hours versus its usual 800 Ethereum. Their Bitcoin reserves are also empty, but their Ethereum reserves have increased by 900%.”

With concerns mounting, blockchain security firm SlowMist’s MistTrack service recommended that crypto platforms tighten risk controls. “Given the significant amount of Ethereum already laundered through eXch into BTC, XMR, etc., platforms should tighten risk controls on any funds coming from there,” the firm advised.

In response to the allegations, eXch acknowledged that a “small portion” of funds from the Bybit hack had indeed passed through its exchange but insisted the case was “isolated” and did not reflect systemic wrongdoing. In an unexpected move, the eXch team further announced plans to donate proceeds from those transactions to open-source initiatives focused on privacy and security, both inside and outside the crypto sector.

The tensions escalated when eXch shared a screenshot of an email from Bybit staff requesting that specific wallet addresses tied to the stolen funds be blocked. The exchange appeared to reject the request, instead accusing Bybit of harming its reputation by labeling deposits from eXch as “high-risk.”

“In light of these circumstances, we would appreciate a clear explanation as to why we should consider providing assistance to an organization that has actively undermined our reputation,” eXch stated in its response to Bybit.

Bybit CEO Ben Zhou weighed in on the controversy, urging eXch to reconsider its stance. “At this point, it’s 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 block funds outflowing from them,” Zhou wrote on X.

The unfolding situation raises serious questions about the role of non-KYC exchanges in the broader crypto ecosystem. While eXch champions decentralization and privacy, its stance could set a precedent for how exchanges handle illicit funds in the future. With regulatory scrutiny intensifying, the crypto industry may soon have to reckon with the balance between financial privacy and combating cybercrime.

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