OKX CEO warns users about Tornado Cash compliance risks OKX CEO warns users about Tornado Cash compliance risks
The US Federal Reserve noted that the sanctioned crypto mixer has continued to see usage from retail users.
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Updated: Aug. 9, 2024 at 2:04 pm UTC
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OKX CEO Star Xu has warned users about the risks of interacting with the sanctioned crypto mixer Tornado Cash.
In an Aug. 9 statement via the social media platform X (formerly Twitter), Xu stated that deposits from sanctioned entities, including Garantex and Tornado Cash, or withdrawals to these entities could trigger compliance risks and lead to account suspension.
Compliance measures
Xu emphasized that OKX adheres to all relevant sanctions policies, including those from the US. As a result, the exchange does not onboard customers from the Specially Designated Nationals (SDN) List and cannot provide services to sanctioned individuals or entities.
He also clarified that this policy was not new and had been in effect for some time. Xu stated:
“If our sanctions controls are triggered due to deposits from or withdrawals to a sanctioned exchange or DeFi protocol like Garantex or Tornado Cash, our compliance team may freeze the related funds and off-board the account.”
The warning follows a public appeal by an X user known as Satoshi Friends, who urged the exchange users from Commonwealth of Independent States (CIS) countries to withdraw their funds from the platform.
According to him, the exchange has enacted strict policies that led to sudden account blocks, fund freezes, and asset losses. He claimed that these actions severely impacted several influencers, who had their accounts blocked and funds limited, with resolutions only achieved after direct engagement with the OKX team.
Tornado Cash’s usage
OKX’s warning follows a Federal Reserve Bank of New York report assessing the impact of US sanctions on Tornado Cash.
According to the report, the sanction had a telling impact on how the crypto mixer was used. Larger pools on the platform have not fully recovered to pre-sanction levels. However, smaller pools have shown some recovery, suggesting continued interest from retail users.
Tornado Cash was founded in 2019 by Russian nationals Roman Semenov and Roman Storm. In 2022, the US Department of Treasury sanctioned the platform because it helped launder over $7 billion in illicit funds from malicious actors like the North Korea-backed Lazarus Group.
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Tornado Cash is a decentralized, non-custodial privacy solution built on Ethereum.
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Alexey Pertsev is a software developer who works on security assessments of various projects and systems: banks, social networks, ICO, etc.