German Authorities Seize $38 Million in Crypto from eXch Exchange Amid Criminal Probe

German federal authorities have confiscated over $38 million in digital assets from the now-defunct eXch crypto exchange, a platform accused of facilitating criminal activities. The seizure, announced by the Frankfurt Prosecutor General’s Office, occurred on April 30, just one day before the exchange ceased operations. This move underscores Germany’s intensifying efforts to regulate the cryptocurrency space and curb its misuse for illegal purposes.

The eXch crypto exchange, operational since 2014, specialized in anonymous cryptocurrency swaps, allowing users to trade assets like Bitcoin, Ethereum, and Litecoin without adhering to standard anti-money laundering (AML) or know-your-customer (KYC) protocols. German prosecutors revealed that the platform openly marketed its lack of AML measures, particularly on forums tied to the “criminal underground economy.”

This absence of oversight allegedly enabled the movement of approximately $1.9 billion in cryptocurrencies through eXch, with a portion linked to illicit sources. Notably, authorities highlighted that funds from a $1.5 billion theft from the Bybit exchange, attributed to the North Korean hacker group Lazarus, were laundered through eXch.

During the operation, authorities seized 34 million euros ($38.2 million) in crypto assets and over 8 terabytes of data, including the platform’s server infrastructure in Germany. The operators of eXch now face allegations of commercial money laundering and running an illegal trading platform. The swift action by German officials was strategic, as they anticipated the exchange’s closure and secured critical evidence despite the short notice.

eXch’s Defense and Closure

In mid-April, eXch announced it would shut down on May 1, citing pressure from a “transatlantic operation” aimed at closing its platform and prosecuting its team for charges related to money laundering and terrorism. The exchange’s operators defended their privacy-focused model, arguing that their goals were misunderstood.

They criticized AML and KYC measures adopted by other exchanges, claiming such protocols were ineffective in preventing financial crimes. “Privacy is not a crime,” the platform stated, asserting that third-party screening tools used by competitors failed to address money laundering or terrorism financing meaningfully.

Despite these claims, the seizure marks a pivotal moment in the global push to regulate cryptocurrency platforms that operate without compliance measures. The eXch case highlights the challenges of balancing user privacy with the need to prevent financial crimes in the rapidly evolving digital asset landscape. As investigations continue, the confiscated assets and data may provide further insights into the scale of illicit activities facilitated by the exchange, potentially leading to additional enforcement actions.