Investigators Reveal eXch’s Role in the Bybit Hack

Crypto exchange eXch has denied suspicions that it helped launder the stolen Bybit funds. The original claim came from blockchain investigator ZachXBT, who stated in his investigations on his Telegram channel that eXch moved $35 million of the stolen funds.

He also highlighted that 34 Ether was delivered to a hot wallet of different exchanges throughout the process. Aligning with ZachXBT’s statements, Nick Bax of the Security Alliance argued that eXch completed around $30 million in transactions connected to North Korea that day.

Also, security company SlowMist claimed that eXch converted a sizable amount of Ether into Monero, Bitcoin, and other altcoins. In a recent message released, eXch denied the charges.

However, it acknowledged processing a tiny percentage of the stolen funds, characterizing the action as an isolated incident. eXch also said that no Ethereum blockchain addresses other than deposit addresses were connected to its platform, adding that the address ending with […] 1123 received these payments.

The platform also said it would donate the money from these transactions for the public’s good. Bybit has been collaborating with blockchain forensic experts to track the stolen money.

Bybit’s Reward

Additionally, 10% of the retrieved sum will be rewarded for helping recover stolen assets. The Lazarus Group, a North Korean organization that laundered over $200 million in hacked cryptocurrency assets from 2020 and 2023, has also been accused of the Bybit hack by various blockchain investigators.

Elliptic, a blockchain analytics and compliance company, claims that the Lazarus Group often launders stolen money by stopping token issuers from freezing the stolen funds. Then, they exchange stolen assets for native blockchain-based assets like ETH.

The group masks its transaction history by distributing the stolen money among several wallets, transferring funds between blockchains, and utilizing mixing services such as Tornado Cash. In the latest case, the group dispersed the stolen assets among 50 wallets, each holding roughly 10,000 ETH, within two hours of the hack.

By February 23, around 10 percent of the $140 million of stolen assets had already been reallocated. Elliptic claims that the stolen ETH is being turned into Bitcoin, even though the amount of money stolen could make this swap process more difficult.

Bybit Hack: OTCs Could Face Mass Freeze – Bitrace

Meanwhile, Bitrace, a cooperative crypto tracing and evaluation platform, alerted users that a widespread shutdown of over-the-counter (OTC) services might be near. In a translated analysis report, Bitrace stated that a large-scale freeze wave affecting OTC groups and cryptocurrency payment services will occur in the next few months.

Bitrace referred to the Bybit attack as the “massive single theft in the entire history of cryptocurrency” since it surpassed earlier thefts in terms of losses, including the $611 million hack by Poly Network in 2021 and the $620 million exploit loss by Ronin Network in 2022. The analytical firm cited previous Lazarus Group attacks, including the 2023 Poloniex hack and the Japanese digital asset exchange DMM attack last year.

Due to both thefts, many OTC corporate addresses and wallets were frozen. During their investigations, Bitrace discovered that hackers don’t just launder their stolen money through unauthorized platforms and mixers.

They also use OTC merchants and centralized platforms to process such funds. Consequently, the stolen cash was unintentionally or purposely transferred to numerous user accounts on other exchanges.

Ben Zhou, the CEO of Bybit, stated that the exchange could recover the losses incurred due to the attack in just two days.  He also informed traders that the exchange has “fully closed the ETH gap” and that the platform will soon release the audited plan-of-record document.

Bybit Recovered $1.4B Loss Through ETH Purchases and Loans

Bybit claimed to have entirely recovered the funds two days after suffering a loss of over $1.4 billion. Bybit used a combination of whale deposits, loans, and Ethereum purchases to make up for its $1.4 billion loss, according to Lookonchain data.

According to an X post on February 24, Bybit received 157K ETH (about $437.8M) from a single address, most likely through over-the-counter purchases. A further 109K ETH ($304.M) was acquired by an organization that purchased ETH from decentralized and centralized exchanges—most likely Bybit.

MEXC gave 12K stETH ($33.9M), Bitget contributed 40K ETH ($106M), while whales and institutions contributed more than $127M in ETH as loans. An anonymous buyer also sent 22,609 ETH ($61.9M) to the crypto exchange.