German Regulators Shut Down 47 Crypto Exchanges in a Wide Crackdown

German regulators have shut down 47 cryptocurrency exchanges, accusing them of maintaining an "underground economy" for cybercriminals. The move, announced on September 19, represents a significant escalation in Germany's drive to combat money laundering and other illicit activities in the crypto space.

The joint operation was conducted by Germany's federal criminal police office, Frankfurt's main prosecutor's office, and the country's cybercrime division. It targeted exchanges involved in "deliberately concealing the origin of criminally obtained funds on a large scale." According to authorities, these platforms were knowingly facilitating ransomware operators, botnet controllers, and black market traders in converting illicit gains into legitimate currency.

The German government has seized development, production, and backup servers of these exchanges, thereby gaining access to a treasure trove of user data. The websites of these exchanges flash a warning by the authorities: "We have your data. Transactions, registration data, IP addresses. Our search for traces begins. See you soon."

The most prominent one was taken down: Xchange.cash, in operation since 2012, reportedly processed nearly 1.3 million transactions for 410,000 users. Besides that, other major exchanges taken down include 60cek.org, Baksman.com, and Prostocash.com-all with large amounts of user bases and transaction volumes.

Despite this enormous seizure of data, German authorities have expressed that mass prosecution may not be possible because many of those alleged perpetrators live outside German jurisdiction. "Cybercriminals often live abroad and some countries tolerate or even protect them. Therefore, they often remain beyond the reach of German law enforcement," it added.

This is an interesting time for the crackdown on unlicensed custodial wallets in the country's general relationship with cryptocurrencies. Recently, the German government was among the largest Bitcoin holders globally, holding close to 50,000 BTC, which were seized from the piracy site Movie2k.to back in 2020. During June and July this year, the government sold its holdings in a series of multi-transaction sales that would be worth about $3.15 billion at current prices.