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Once a go-to swapper for hackers and drainers, eXch was shut down by German police in April — but continued activity suggests the story isn’t over.Without Know Your Customer (KYC) checks, eXch wasn’t your typical crypto exchange. It acted more like an instant swapper, allowing bad actors and cybercriminals to fly under the radar for years.Among its clients was the Lazarus Group. The North Korean state-backed hacking unit thrust eXch into the spotlight back in February, when it used the platform to funnel some of the $1.4 billion it stole from Bybit. When Bybit traced its stolen funds to eXch, it requested assistance — but the platform refused.This led to a fierce discussion over privacy versus security, but ultimately, eXch announced it would close its doors on April 17; on April 30, German authorities made it official.But according to security firm TRM Labs, the platform may have continued operating in stealth mode after the takedown. Here’s the rise, fall and afterlife of alleged crypto laundromat eXch.eXch shuts front door, keeps back door unlockedAlongside its shutdown announcement, eXch posted a message claiming it would not facilitate criminal proceeds. The post was removed within hours, and operations quietly resumed — signs of an internal disagreement or perhaps even a calculated attempt to lower visibility, according to TRM.CSAM-related fund flows traced to eXch. Source: TRM LabsGerman authorities seized eXch’s servers and confiscated 34 million euros ($38 million) in crypto, along with more than eight terabytes of data, effectively dismantling its public-facing infrastructure.Related: North Korean spy slips up, reveals ties in fake job interview“Just like we saw with Garantex rebranding as Grinex, eXch didn’t fully die after the shutdown. It quietly kept servicing a handful of partners via API, which meant laundering activity continued even after the public takedown,” said Jeremiah O’Connor, co-founder and chief technology officer of security firm Trugard.O’Connor added that it’s not unlikely for such platforms to serve loyal customers even after seizures.EXch website visited on May 13. Source: eXch“The people behind eXch.ch took full advantage of operating across multiple countries. The domain was registered through a UK-based provider, listed Switzerland as an admin location, hosted infrastructure in France, and had servers seized in Germany,” O’Connor said.It’s still unclear if eXch will kill its API or come back under a new name. TRM said in the May 2 blog post that the platform’s remaining back-end access continued to provide anonymization infrastructure for threat actors.No KYC, pooled liquidity draws illicit funds to eXchEXch’s origins trace back to 2014, according to “Fantasy,” lead investigator at crypto insurance firm Fairside Network. In an October 2024 investigation, Fantasy identified the platform’s first public appearance as a BitcoinTalk forum account promoting automatic swaps between Bitcoin (BTC), Perfect Money and BTC-e vouchers — payment methods commonly associated with high-risk transactions. Fantasy also traced the original Bitcoin wallet tied to eXch and found it was likely funded via BTC-e, the now-defunct crypto exchange shuttered by US authorities in 2017 for its role in laundering criminal proceeds.Fantasy’s forensic research found that the modernized form of eXch emerged in 2022, when its Ethereum hot wallet was first funded. Not long after, it became a hub for prominent crypto drainers.Monkey Drainer — the first known large-scale drainer-as-a-service operator — used eXch before its retirement. Other draining service providers like Pink Drainer and Inferno Drainer also passed funds through the platform, along with several major exploiters.EXch’s modern wallets traced to accounts held at Binance and OKX. Source: Fantasy/MetaSleuthEXch required no identity verification, allowing users to move funds with anonymity. That made it an attractive tool for cybercriminals looking to clean stolen assets.“EXch managed to stay active for years — despite facilitating obvious illicit activity — because there’s still a big gap between what regulators ‘can’ do and how fast technology is moving,” Amit Levin, former investigator at Binance, told Cointelegraph.“In today’s world, anyone can launch a smart contract or run a crypto service from anywhere, often without revealing who they are. And if there’s no registration, no KYC and no one to hold accountable, enforcement becomes close to impossible.”The platform also drew confidence from threat actors by using a pooled liquidity system that blended user deposits and withdrawals, making it difficult for investigators and law enforcement to trace the flow of funds.When eXch knew and did nothingEXch denied laundering funds for North Korean crypto hackers, and in its shutdown notice, it framed the project as an attempt by privacy enthusiasts to “restore balance” in the industry. It criticized Anti-Money Laundering enforcement and condemned companies offering address risk scoring APIs as “parasites” profiting off government fear.“Service providers in the crypto space are, for the most part, not decentralized; that is, they retain control over or access to customers’ assets, as demonstrated in the case of eXch,” Gal Arad Cohen, partner at S. Horowitz & Co, told Cointelegraph.“A financial intermediary operating in the crypto sector faces risks similar to those of traditional financial service providers and should, therefore, be held to equivalent standards and regulatory requirements,” she said.The closure of eXch is a “huge win” for crypto, according to Alex Katz, CEO of security firm Kerberus. However, Katz warned that bad actors can migrate to alternative projects, like THORChain, which received a shoutout in eXch’s unapologetic farewell manifesto.In the Bybit hack, decentralized swap protocol THORChain was used as the main bridge to swap around 500,000 Ether (ETH) to Bitcoin.EXch operators also used THORChain to allegedly obfuscate trails. Source: Tanuki42EXch stated that its partners would retain access to its API for a limited time, but future operations would depend on the “new management team.” The old team recommended setting up new liquidity pools to maintain seamless functionality and said it would provide consultations.It signed off with a defiant message: “Privacy is not a crime.”German authorities reported that $1.9 billion in crypto flowed into eXch since its inception. Its operators are suspected of commercial money laundering and running a criminal trading platform.Magazine: ChatGPT a ‘schizophrenia-seeking missile,’ AI scientists prep for 50% deaths: AI Eye

Two US senators are calling on Treasury Secretary Scott Bessent to “exercise [the department’s] authority” and change a provision affecting taxes on corporate holdings of digital assets.In a May 12 letter, Senators Cynthia Lummis and Bernie Moreno suggested Bessent had the authority to change the definition of “adjusted financial statement income” under existing US law in a way that could reduce what digital asset companies pay in taxes. The proposed adjustment was suggested as a way to modify a provision of the Inflation Reduction Act, signed into law in 2022.“Our edge in digital finance is at risk if US companies are taxed more than foreign competitors,” said Lummis in a May 13 X post.May 12 letter to Treasury Secretary Scott Bessent. Source: Cynthia LummisAccording to the two senators, the proposed modification would provide “relief to corporations that invest in digital assets.” Lummis has been one of the most outspoken digital asset advocates in Congress, while Moreno took office in January after crypto-backed political action committees spent roughly $40 million to support his 2024 Senate race.Related: Arizona governor kills two crypto bills, cracks down on Bitcoin ATMsThe Inflation Reduction Act, which went into effect in 2023, imposes a 15% minimum tax on companies that report more than $1 billion in profits for three consecutive years. The measure would seemingly include unrealized crypto gains and losses, leading to Lummis’ and Moreno’s calls for the Treasury Department to “act swiftly.”Senate awaiting second vote on stablecoin billThe call from the two senators came as lawmakers in the Senate are expected to consider another vote on the Guiding and Establishing National Innovation for US Stablecoins, or GENIUS Act — legislation to regulate payment stablecoins in the US. A motion for consideration failed to move forward in the Senate on May 8 due to Democratic lawmakers pushing back on Donald Trump’s ties to the crypto industry.Lummis, one of the bill’s co-sponsors, suggested that she would continue to support digital asset regulation. The Senate could take up another vote in a matter of days. Magazine: Best and worst countries for crypto taxes — plus crypto tax tips

Proponents of a bill to regulate stablecoins in the US Congress will likely take up another vote on the legislation in a matter of days without responding to concerns about President Donald Trump’s financial ties to the cryptocurrency industry.The Guiding and Establishing National Innovation for US Stablecoins, or GENIUS Act, failed to get enough votes to pass in the US Senate on May 8 amid calls from some Democratic lawmakers to halt any legislation related to digital assets until Republicans could address Trump’s potential conflicts of interest. Immediately following the vote, some lawmakers from both parties suggested they could reconsider the bill as early as this week, but without agreeing on a bipartisan path forward.After the GENIUS Act failed to proceed in a 48 to 49 vote in the Senate, Majority Leader John Thune made a motion to reconsider, setting up a possible vote on the matter within days. A source familiar with the matter told Cointelegraph Republicans who backed the bill were unlikely to modify it to block Trump or any member of his administration from investing in digital assets, claiming it was beyond Congress’s authority under the Constitution.“[…] this delay is not inherently detrimental,“ said Liat Shetret, vice president of global policy and regulation at blockchain analytics firm Elliptic. “We can expect the bill to return to the floor, with this pause giving both parties time to clarify provisions and address lawmakers’ concerns.”The Cedar Innovation Foundation, an organization tied to the political action committee (PAC) Fairshake, issued a warning to Senate leadership to “avoid political games” and pass a stablecoin bill “in the coming days.” Fairshake spent more than $131 million to support candidates in the 2024 US elections, some of whom are currently serving in the House and Senate. There are still more than 500 days until the 2026 midterms, when many members of Congress are up for reelection.On May 12, the Senate resumed consideration of the motion to proceed to consideration of the GENIUS Act, suggesting another vote soon.Related: US Treasury Secretary expresses support for crypto bills at hearingChanges to stablecoin or market structure bills?Should Republicans in the Senate reintroduce the bill without any changes, it’s unclear whether they would have enough support to clear a 60-vote majority to avoid a Democratic filibuster — a process to delay or sometimes block a vote on a bill. The Trump family’s ties to the crypto platform World Liberty Financial and its stablecoin, USD1, have raised potential corruption concerns, as has offering the top holders of his TRUMP memecoin the chance to pay for access to the president through an exclusive dinner and reception. “[…] the Republicans’ bill did nothing to address Trump’s conflict, and instead voted to hand Trump the authority to write the rules over his and his competitors’ stablecoins,” said Democratic Representative Maxine Waters in a May 6 statement. She blocked a hearing to discuss a possible digital asset market structure bill, citing concerns about Trump’s “ownership of crypto.”Democratic lawmakers have already introduced possible solutions to what they called the “biggest corruption scandal in the history of the White House” — with legislation in the House and Senate to bar members of Congress, the president, the vice president, and their families from profiting off memecoins. Senators Elizabeth Warren and Chris Van Hollen also reportedly called on the president to fully divest from USD1 before making any possible deals with foreign governments.The nonpartisan organization State Democracy Defenders Action reported in April that Trump’s crypto holdings were worth roughly $2.9 billion, which accounted for 40% of his wealth. This report came before the launch of World Liberty Financial’s stablecoin, which an Abu Dhabi-based investment firm said it would use to settle a $2 billion investment in Binance. Trump’s sons, Eric, Donald Trump Jr., and Barron, were all listed as “Web3 ambassadors” for the platform.Magazine: Trump’s crypto ventures raise conflict of interest, insider trading questions