Germany Confiscates $38 Million In Crypto Assets From Exchange Tied To Record-Breaking Theft
German law enforcement agencies have seized 34 million euros ($38 million) in cryptocurrency from eXch, an exchange platform allegedly used to launder funds stolen in the record-breaking $1.4 billion Bybit hack. According to Cointelegraph, the seizure was announced on May 9 by Germany's Federal Criminal Police Office (BKA) and Frankfurt's main prosecutor's office. The confiscated assets included Bitcoin, Ethereum, Litecoin, and Dash. Authorities also seized the platform's German server infrastructure containing over eight terabytes of data and shut down the exchange completely.
The operation marks the third-largest cryptocurrency confiscation in BKA's history. German officials described eXch as a "swapping" service that allowed users to exchange various crypto assets without implementing Anti-Money Laundering (AML) measures. The platform had operated since 2014 and reportedly facilitated approximately $1.9 billion in cryptocurrency transfers, some of which were allegedly of criminal origin.
The Bybit Hack Connection
The eXch seizure is directly connected to February's massive Bybit hack, which resulted in the theft of approximately $1.46 billion in crypto assets. According to Elliptic, this incident represents the largest cryptocurrency heist in history and possibly the largest theft of any kind ever recorded. The Dubai-based exchange was compromised on February 21, 2025, when hackers gained access to Ethereum held in Bybit's cold wallet.
The FBI has attributed the attack to North Korea's Lazarus Group, a state-sponsored hacking collective responsible for numerous large-scale crypto thefts. The group has stolen over $6 billion in crypto assets since 2017, with proceeds reportedly funding North Korea's ballistic missile program.
Security analysts identified eXch as a key platform in the laundering process shortly after the hack. Blockchain detective ZachXBT reported that the Lazarus Group transferred 5,000 ETH from the Bybit hack to eXch, using it to launder approximately $35 million of the stolen funds. Despite requests from Bybit to block these transactions, eXch reportedly refused to cooperate and earned hundreds of thousands of dollars in fees from processing these illicit funds.
The Shutdown Timeline
Before the German authorities' intervention, eXch had announced plans to voluntarily cease operations by May 1, 2025. In mid-April, the exchange published a notice on Bitcoin Talk stating it would shut down due to what it described as "a hostile environment." According to Cointelegraph, the exchange admitted to being the subject of "an active transatlantic operation" aimed at shutting it down and potentially pursuing charges.
The timing of eXch's announced closure and the subsequent German seizure suggests the exchange's operators were aware of the impending law enforcement action. The situation mirrors Germany's broader crackdown on cryptocurrency exchanges operating without proper anti-money laundering controls. In September 2024, German authorities shut down 47 cryptocurrency exchanges in an operation dubbed "Final Exchange," according to The Record.
Germany's Regulatory Stance
Germany has taken a proactive approach to cryptocurrency regulation through its Federal Financial Supervisory Authority (BaFin). The country was among the first European jurisdictions to mandate the Travel Rule for crypto transactions, even before the European Union. According to Notabene, Germany implemented the Crypto Securities Transfer Regulation (KryptoTransferV) in 2021, which requires sharing identifying information about senders and receivers for cryptocurrency transactions over €1,000.
As of 2025, Germany's regulatory framework has further evolved with the implementation of the Markets in Cryptoassets Regulation (MiCA), which sets uniform standards across the European Union. Finregnewsblog reports that BaFin released guidance on crypto-asset services under MiCA in January 2025, providing clarification on licensing requirements and obligations for providers.
Senior public prosecutor Benjamin Krause emphasized the importance of action against "quick and anonymous opportunities for money laundering for any amount" in his statement about the eXch seizure. "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," he stated.
Market Impact And Security Concerns
The Bybit hack and subsequent laundering attempts have highlighted significant security vulnerabilities in the cryptocurrency ecosystem. The breach prompted massive withdrawals from Bybit, with users pulling out over $5 billion according to 99Bitcoins. Although Bybit CEO Ben Zhou initially assured users the company could absorb the losses, the exchange later scaled back some offerings, including shutting down its NFT marketplace.
By April 2025, Bybit had reportedly regained its pre-hack market share of approximately 7%. The exchange paid over $2 million in bounties to individuals providing information that helped trace and freeze the stolen funds. As of late March, approximately 89% of the $1.4 billion had been located.
The incident has prompted calls for increased security measures throughout the industry. Security researcher Taylor Monahan from MetaMask warned that "no one is prepared for the attack vector" that compromised Bybit, telling DL News that "this will happen again and again and again." She pointed to similar attacks on exchanges WazirX, Radiant Capital, and DMM Bitcoin, which followed comparable patterns in 2024.
Broader Implications For Cryptocurrency Industry
The eXch seizure represents a significant victory for law enforcement in combating cryptocurrency-related financial crimes. It demonstrates increasing international cooperation in tracking and recovering stolen digital assets. Similar coordinated actions have targeted other platforms, such as the disruption of Garantex cryptocurrency exchange by the U.S. Department of Justice working with authorities in Germany and Finland, as reported by the DOJ.
Industry experts suggest these enforcement actions may drive further regulatory developments. The German BaFin has been a leading advocate for comprehensive cryptocurrency regulation. BaFin President Mark Branson previously called for global regulation of the cryptocurrency industry, stating that "a hands-off approach that would just let the industry grow as a playground for grownups" was the wrong tactic, according to Reuters.
As regulatory frameworks continue to evolve, legitimate cryptocurrency businesses face increased compliance requirements. From 2025, German crypto service providers must adhere to MiCA standards, with Rue.ee noting that this includes enhanced anti-money laundering measures and higher capital requirements. Additionally, the European Union's DAC8 directive is expected to take effect in 2025, granting tax authorities greater power to verify crypto ownership.
These developments represent a critical turning point for the cryptocurrency industry as it matures and faces greater oversight from global regulators intent on preventing illicit financial activities while allowing legitimate innovation to continue.
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