ZachXBT Targets Lesser-Known DEX in Fresh Allegations Over Illicit Crypto Flows

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ZachXBT Targets Lesser-Known DEX in Fresh Allegations Over Illicit Crypto Flows

ZachXBT is a blockchain researcher known for consistently exposing crypto companies and individuals he suspects of wrongdoing or illegal practices.

He’s now focusing on Tokenlon, a smaller decentralized exchange with about 17,000 followers on X, as part of his latest claims.

Tokenlon Draws Scrutiny

In my research, I’ve come across allegations by ZachXBT suggesting a significant portion of trading volume on the Tokenlon decentralized exchange may originate from illegal activities. Specifically, he points to connections with romance scams, human trafficking, various investment frauds, and illicit marketplaces operating within China. I’m currently investigating these claims further.

The investigator also named Ben He Bin, a co-founder of Tokenlon, and indicated that Tokenlon and ImToken might face future scrutiny. He further highlighted several other platforms – including Butter Network, HiFiSwap, Bridgers/SWFT, and Tokenlon – believing they are involved in illicit financial activity and should be prioritized for investigation.

Someone reported that a friend’s mother lost 270 Ethereum to a scam, with the funds going to Tokenlon. ZachXBT responded that he’s seen this happen to others, and while Tokenlon claims to be decentralized, he believes it doesn’t fully operate that way in reality.

Tokenlon has responded to concerns about illegal funds being used with decentralized applications. They confirmed they don’t hold users’ funds themselves, and all transactions are visible on the blockchain. They strongly stated they do not support criminal activity.

We understand that open, accessible infrastructure can be misused. Addressing this problem needs a coordinated effort involving wallet providers, cybersecurity companies, and law enforcement agencies.

Decentralization Claims Questioned

ZachXBT pointed to a 2022 report by Cryptoforensic Investigators that raised doubts about how decentralized Tokenlon really is. The report explained that unlike platforms like Uniswap and 1inch, which run entirely on secure, unchangeable code, Tokenlon operates differently. Specifically, the report noted that Tokenlon, which is connected to the imToken wallet and imToken PTE Ltd., lets users trade Bitcoin using its “imBTC DApp.”

The analysis suggests this system operates more like a traditional over-the-counter (OTC) service than a genuinely decentralized exchange. It works by users sending Bitcoin to wallets managed by Tokenlon, where the transaction is recorded internally, and then converted into imBTC before being exchanged for USDT. The report claims that imBTC acts like a centrally controlled asset tied to Bitcoin, with Tokenlon holding the actual Bitcoin, much like how companies that issue stablecoins manage their reserves.

In my analysis of recent crypto trends, I’ve come across a concerning report – a 53-page working paper published on March 28th, 2024, investigating the link between cryptocurrency and ‘pig butchering’ scams. The research indicates a significant portion – roughly 57 to 60% – of all Tokenlon swaps between 2022 and 2023 were connected to these scam networks. What’s particularly troubling is the pattern we’re seeing: funds initially sent in ETH or USDC from victims often flow through Tokenlon, are converted to USDT or DAI, and then ultimately end up in centralized deposit accounts.

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2026-05-05 10:00