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dYdX Blocks Accounts Associated with Tornado Cash in Compliance with OFAC Sanctions

UTC by Ibukun Ogundare · 3 min read
dYdX Blocks Accounts Associated with Tornado Cash in Compliance with OFAC Sanctions
Photo: Unsplash

dYdX explained that the sudden influx of flags affected many account holders that do not have directly engaged with Tornado Cash.

Shortly after the US Office of Foreign Assets Control (OFAC) placed sanctions on Tornado Cash, crypto exchange dYdX said it had blocked accounts engaged with the coin mixer. On Monday, the OFAC sanctioned Tornado Cash for its complicity in a crypto laundering case. The federal agency said the cryptocurrency mixer on the Ethereum blockchain is involved with laundering worth over $7 billion. The Department added that Tornado Cash has been laundering money since its inception in 2019. In addition, the Treasury Department said popular North Korea’s Lazarus Group has also laundered more than $455 million through the platform. Another criminal activity linked to Tornado Cash is the Nomad Bridge hack. Reports revealed the hackers passed at least $7.8 million in stolen funds through the platform. As a result of these illegal activities, the OFAC sanctioned the crypto mixer.

In compliance with the sanctions on Tornado Cash, dYdX said it had blocked accounts associated with Tornado Cash. The crypto exchange explained in an official announcement:

“dYdX recently became aware of a significant increase in accounts flagged by our compliance provider that were subsequently blocked by dYdX. Many accounts were blocked because a certain portion of the wallet’s funds (in many cases, even immaterial amounts) were associated at some time with Tornado Cash, which was recently added to the sanctions list by the U.S. Treasury’s OFAC.”

dYdX Blocks Accounts Linked with Tornado Cash

Furthermore, dYdX explained that the sudden influx of flags affected many account holders that do not have directly engaged with Tornado Cash. The exchange said some account users sometimes are unaware of the origin of the funds they receive in their accounts. Regardless of the circumstance, dYdX said it must “maintain certain restrictions.”

The company made a call to account holders who believe they have been wrongly blocked. Victims of such are to reach out to the exchange for rectification. In addition, dYdX reminded customers that it has no power to seize their funds.

“All customers that deposit to the protocol can always withdraw and will always maintain custody of their funds. dYdX trading does have the ability to put users’ accounts in close-only mode on our hosted matching engine.”

Apart from dYdX, many companies have also reacted to the OFAC sanctions on Tornado Cash. Ethereum infrastructure provider Alchemy halted users of Tornado Cash from accessing its nodes. Also, software company Infura also took drastic steps to follow the Treasury Department’s order. Also, Circle froze USDC funds that are within Tornado Cash smart contracts.

On the same day the OFAC sanctioned Tornado Cash, GitHub blocked the accounts of the crypto mixers contributors. One of the contributors, Tornado Cash co-founder Roman Semenov said the IT management company suspended his accounts.  “Is writing an open source code illegal now?” asked he.

Blockchain News, Cryptocurrency news, News
Ibukun Ogundare

Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.

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