Federal law enforcement is closing in on a web of digital currency activity linked to one of the largest crypto heists in history. Investigators have traced more than $35 million in stolen Bitcoin connected to the February 2025 Bybit hack — a $1.4 billion exploit that rocked the global crypto market.

The digital trail has led agencies to eXch, a crypto exchange now accused of laundering funds on behalf of North Korea’s notorious Lazarus Group. The FBI, along with international cybercrime units, is coordinating a transatlantic operation to investigate the exchange and recover stolen assets.

In an April 17 statement, eXch announced it will cease operations on May 1, citing what it called a hostile regulatory environment and intelligence operations targeting its leadership. The exchange admitted to processing a portion of the hacked funds, though it described the amount as “insignificant.”

“We’ve withstood pressure before,” eXch’s leadership wrote, “but operating under direct SIGINT [Signals Intelligence] pressure isn’t sustainable.”

Security analysts say the exchange was likely under surveillance for weeks before the shutdown notice. Blockchain trackers flagged suspicious flows of Bitcoin tied to the Bybit breach, ultimately helping authorities trace some of the stolen funds to eXch.

“This shows how much more transparent crypto has become,” said one blockchain investigator. “If you move dirty money on-chain, we’ll find it.”

The Bybit hack sent shockwaves through the crypto space. In the immediate aftermath, users pulled over $5 billion from the platform, fearful of further breaches. While Bybit assured customers it could absorb the losses, the company later shuttered parts of its Web3 division and closed its NFT marketplace.

As of March 20, nearly 89% of the stolen assets had been traced, thanks in part to a $2 million bounty program launched by Bybit. That effort rewarded tipsters who helped freeze stolen tokens before they could be laundered through smaller exchanges or converted into fiat.

Bybit has since recovered its pre-hack market share, regaining roughly 7% of global crypto volume by April 10.

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While enforcement efforts intensify, there may be regulatory relief ahead. Speaking at the Economic Club of Chicago, Federal Reserve Chair Jerome Powell said regulators could adopt a more open approach to digital assets in the near future.

“We’ve taken a conservative stance, especially after the wave of failures and frauds,” Powell said. “But we’re entering a new phase.”

Powell pointed to growing bipartisan interest in regulating stablecoins, signaling that Congress may soon revisit a legal framework that stalled in past sessions. He said any new policy must balance innovation with risk controls, especially as crypto becomes more intertwined with the traditional banking system.

“The climate is changing,” Powell noted. “You’re seeing digital assets move into the mainstream.”

For more on how federal agencies are tackling digital fraud, read our report on new IRS scams targeting seniors.

Just as regulators and law enforcement ramped up scrutiny, blockchain analysts spotted two massive Bitcoin transfers to Coinbase on April 17 — totaling more than $130 million. The transactions, which occurred within minutes of each other, originated from the same anonymous wallet.

Analysts suspect the moves came from a single “whale” — a large-scale investor or institution — possibly preparing for a market repositioning. Such transfers often signal either an imminent sell-off or a liquidity move ahead of major news.

Despite the volatility, Bitcoin continues to hover near the $85,000 mark, showing unexpected resilience. But traders remain split: is the next move up, or is a correction coming?

The crypto world faces a turning point — where law enforcement, regulators, and major investors are all reshaping the industry at once. With the FBI chasing billions in stolen funds, the Fed opening the door to policy reform, and whales making bold moves, the pressure is rising across the board.

Stay with us for updates as the situation unfolds.

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