47 Crypto Exchanges Seized in Germany

In a significant move to combat crypto-related money laundering, the German government has shut down 47 cryptocurrency exchanges. These exchanges are accused of deliberately facilitating an “underground economy” for cybercriminals.

A joint statement released on September 19th by Germany’s Federal Criminal Police Office, Frankfurt’s Main Public Prosecutor’s Office, and the country’s Office for Combating Cybercrime accuses the seized exchanges of knowingly violating anti-money laundering (AML) regulations. The authorities claim that these exchanges failed to properly implement legal requirements, allowing cybercriminals to conceal the origins of illegally obtained funds.

The statement further alleges that the targeted exchanges played a role in laundering funds for various criminal activities. This includes transactions made by ransomware operators, botnet operators, and black market traders who aimed to integrate their illicitly obtained funds into the mainstream financial system.

The German authorities have seized servers belonging to the targeted exchanges. These servers include development servers, production servers, and backup servers. This capture grants access to a vast amount of user data, including transaction details, registration information, and IP addresses.

A message displayed on the websites of the seized exchanges warns users that the authorities have acquired their data and are actively investigating their activities: “We have found their servers and seized them… We have their data – and therefore we have your data. Transactions, registration data, IP addresses… Our search for traces begins. See you soon.”

While the German authorities acknowledge the presence of criminal users on these platforms, they recognize the difficulty in prosecuting them due to their international presence. The statement acknowledges that many cybercriminals reside in countries that do not cooperate with German law enforcement, making them virtually inaccessible for prosecution.

Given the international nature of the crime, the German government may prioritize tracing and disrupting criminal activities over widespread user prosecution.

One notable example is Xchange.cash, which allegedly facilitated nearly 1.3 million transactions for 410,000 users since 2012. Other seized platforms with significant user and transaction volumes include 60cek.org, Baksman.com, and Prostocash.com.

The German government was previously one of the world’s largest Bitcoin holders, having seized nearly 50,000 Bitcoin (worth approximately $3.15 billion at current prices) from the piracy site Movie2k.to in 2020. These holdings were subsequently sold across several transactions in June and July of 2024.

The German government’s crackdown on these cryptocurrency exchanges sends a strong message to the industry regarding the importance of adhering to AML regulations. This action also highlights the international challenges of combating cybercrime in the digital age. As the cryptocurrency landscape evolves, regulators like Germany will likely continue to develop strategies to address the potential misuse of these assets for criminal activities.