The problem with eXch is that it's a centralized service in an environment hostile to privacy, or at least to no-KYC exchange. If I were them, I'd simply comply with court orders (ignoring government requests), or at least restrict/review some transactions (flows above $50,000), or temporarily restrict the service when such events occur. While the above solutions aren't ideal, they're much better than losing eXch; we've lost a good service.
When we have something decentralized then we can do whatever we want I am not recommending doing anything illegal here..
Looking at the broader picture, the biggest problem with eXch arose when they took over a large part of the XMR market. More frequent attacks from competitors such as Whitebit, Bybit etc... From earlier, they marked coins with eXch addresses as tainted, and with a long-term negative campaign against them, we came to the point that eXch was the subject of an investigation.