The decentralized exchange platform dYdX has reported blocking accounts that had previously interacted with Tornado Cash, just days after the US Office of Foreign Assets Control (OFAC) prohibited American residents from interacting with Tornado Cash.
According to dYdX’s official announcement, the platform cannot seize consumer funds. Users will continue to have complete control over the funds and are allowed to withdraw at any time. On its hosted matching engine, dYdX does have the option to deploy their accounts in “close-only” mode.
dYdX saw a marked rise in the number of accounts highlighted by one of its compliance suppliers and subsequently blocked in order to comply with the new sanctions imposed by the OFAC. It stated that a portion of the funds in these account wallets had interacted with Tornado Cash in some way.
It also made clear that many account holders who were banned during the process might not have even directly used the currency mixing solution that is now legal. Certain accounts have been unblocked and dYdX’s compliance guidelines have been adjusted.
Community reacts to sanctions on Tornado Cash
Notably, the United States Treasury Department’s Office of Foreign Assets Control (OFAC) recently sanctioned crypto mixer Tornado Cash, citing the laundering of about $7 billion worth of crypto since 2019, as TheCoinRise reported. This includes the $455 million hack by the North Korean hacking group, Lazarus Group.
Many platforms have been forced to take severe action as a result of recent compliance regulations. Alchemy, a provider of Ethereum infrastructure, prohibits Tornado Cash users from connecting to its nodes. On the other hand, GitHub has drawn criticism for deleting contributors to Tornado’s accounts as soon as the Treasury Department placed the crypto mixing tool to its sanctions list.
Circle also froze USDC held within Tornado Cash’s smart contracts. However, the regulator’s strategy, in the opinion of the company’s CEO, Jeremy Allaire, looks to be flawed.
While Coin Center director of research Peter Van Valkenburgh deemed the restriction to be unconstitutional, Ethereum co-founder Vitalik Buterin disclosed that he used Tornado to donate money to Ukraine.