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OKX, one of the leading cryptocurrency exchanges, announced a stringent policy against users engaging with crypto mixer Tornado Cash.
Chief Operating Officer, Star Xu, took to social media to clarify that any account associated with Tornado Cash would face immediate closure.
In today’s statement, Xu emphasized that any users previously sanctioned would be barred from opening new accounts on OKX. Additionally, the exchange will terminate accounts linked to deposits from sanctioned entities, including Tornado Cash and Garantex.
This decision follows an incident where a user, known as Satoshi Friends, reported being blocked from using OKX due to previous interactions with Tornado Cash.
#okx #urgent
ALL @okx EXCHANGE USERS ARE AT RISKSince 2019, I have been a partner of the OKX exchange, recommended it to you and actively used it myself.
Until today, it worked honestly and stably.
But today, I regret to admit that the exchange policy and all the… pic.twitter.com/fQiDRj6aHO
— Satoshi Friends 🌱 (@slezisatoshi) August 8, 2024
Founded in 2019 by Russian nationals Roman Semenov, Alexey Pertsev, and Roman Storm, Tornado Cash has been under regulatory scrutiny for facilitating anonymous cryptocurrency transactions. The platform uses complex cryptography to obscure the origins of funds, making it difficult to trace transactions.
In May 2024, co-founder Alexey Pertsev was sentenced to five years for violating anti-money laundering laws, further solidifying Tornado Cash’s controversial reputation.
Similarly, Tornado Cash has been implicated in laundering stolen funds for international criminal organizations and allegedly aiding North Korea’s nuclear program through its connections with the Lazarus Group.
In response, the U.S. government, through the Office of Foreign Assets Control (OFAC), sanctioned the platform in 2022. These sanctions effectively banned U.S. citizens or entities from engaging with Tornado Cash.
Impact of Sanctions on Tornado Cash
The Federal Reserve Bank of New York published a report on Wednesday revealing the substantial impact of the OFAC sanctions on Tornado Cash.
According to the report, the usage of Tornado Cash dropped by 90% following the sanctions, as reported by TRM Labs in October 2023. However, the platform has also seen some recovery, particularly in smaller transaction pools, indicating continued interest among retail users.
Recall that Nomad hackers recently moved their Ethereum to Tornado Cash after taking advantage of the crypto market crash to acquire Ethereum using the stolen DAI tokens.
The debate surrounding Tornado Cash centers on the balance between privacy and regulation in cryptocurrency transactions. While proponents argue for the right to transact privately, critics point out the challenges posed by platforms like Tornado Cash in preventing illegal activities.
Notably, the crackdown on Tornado Cash is part of a broader trend where privacy-focused platforms like Monero and Zcash have faced regulatory pressures. Similar actions have been taken against other entities, including the Pancake Bunny protocol, which experienced sanctions after its involvement in a flash loan attack.
