KEY POINTS
- The German government said the crypto exchanges enabled transactions without appropriate KYC measures
- IT systems and other data were seized in the shutdown as part of a probe into the German darknet
- Germany used to be a Bitcoin whale, but it has since dumped its $3 billion stash
Germany, once one of the countries with the largest Bitcoin treasuries, has shuttered dozens of cryptocurrency exchanges that it said had been used by cybercriminals, marking one of the biggest exchange crackdowns in history.
The shutdowns, announced Thursday by the Public Prosecutor General's Office, were implemented by the government's Central Office for Combating Cybercrime (ZIT) and the Federal Criminal Police Office (BKA).
Deliberate Actions Leading to Seizure
"The operators of the exchange services that have now been shut down are accused of deliberately concealing the origin of criminally obtained funds on a large scale through inadequate implementation of legal requirements for combating money laundering (so-called know-your-customer principle), and thus avoiding money laundering and the operation of criminal trading platforms on the Internet," as per a Google translation of the Public Prosecutor General's Office Thursday press release.
German authorities further accused the shuttered crypto exchanges of enabling transactions without proper registration and without KYC measures.
"The offer was aimed at quickly, easily and anonymously exchanging cryptocurrencies for other crypto or digital currencies in order to disguise their origin," the press release stated.
Aside from blocking the exchanges on the German internet space, IT systems and other data were also seized as part of the investigation into the local darknet.
In a separate statement, the BKA said shutdown measures on crypto exchanges come with the goal of "weakening and smashing the infrastructure of cybercriminals" who have considerably taken funds "from the underground economy."
Veteran Exchange Included in Shutdown
Among the dozens of exchanges shuttered were Xchange.cash, according to a website set up by the German government for awareness about its crackdown on criminal activity within crypto platforms.
Xchange.cash is said to have started operating in 2012 and has more than 400,000 users. It facilitated over 1.2 million transactions.
Other exchanges included in the crackdown were 60cek.org, Baksman.com, and Bankcomat.com, which all started in 2016. Some of the seized exchanges were founded in recent years, including CoinBlinker.com, Cryptostrike, DotSatoshi.com, and BTCWorm.com.
Germany: the Former Bitcoin Whale
Germany's announcement about its clampdown on crypto exchanges came just months after it offloaded its $3 billion Bitcoin stash that it seized from piracy site Movie2k.to back in 2020.
The European nation dumped its massive BTC stash from June through July until it sold off all its 50,000 Bitcoins. The sell-off triggered widespread FUD (fear, uncertainty, and doubt) across the crypto community, and in multiple instances, sent BTC prices plummeting.
Germany is one of the countries that has called for global digital assets regulation. Its financial regulator, BaFin, urged for cooperation on a framework that will prevent fraud and other activities such as the events that led to the collapse of FTX.
