Recently, OKX CEO Star Xu issued a warning to users about the potential risks associated with interacting with the sanctioned crypto mixer Tornado Cash. He highlighted that deposits from sanctioned entities, such as Garantex and Tornado Cash, or withdrawals to these entities could pose compliance risks and result in account suspension. Xu emphasized that OKX strictly adheres to all relevant sanctions policies, including those from the US, and does not onboard customers from the Specially Designated Nationals (SDN) List.
Xu made it clear that the exchange has long-standing policies in place to prevent interactions with sanctioned individuals or entities. He stated that if sanctions controls are triggered due to deposits or withdrawals involving sanctioned exchanges or DeFi protocols, the compliance team at OKX may freeze the related funds and off-board the account. This policy is not new and has been in effect for some time, aiming to ensure the integrity of the platform and comply with regulatory requirements.
Following Xu’s warning, a user named Satoshi Friends urged OKX users from Commonwealth of Independent States (CIS) countries to withdraw their funds from the platform due to strict policies leading to sudden account blocks, fund freezes, and asset losses. Influencers were reportedly impacted by these actions, with their accounts blocked and funds limited. Resolutions were only achieved after direct engagement with the OKX team, highlighting the challenges faced by users under the exchange’s policies.
OKX’s warning coincides with a Federal Reserve Bank of New York report assessing the impact of US sanctions on Tornado Cash. The report noted a significant impact on the usage of the crypto mixer, with larger pools on the platform not fully recovering to pre-sanction levels. However, smaller pools have shown some recovery, indicating ongoing interest from retail users. Tornado Cash, founded by Russian nationals Roman Semenov and Roman Storm in 2019, was sanctioned by the US Department of Treasury in 2022 for facilitating the laundering of over $7 billion in illicit funds from groups like the North Korea-backed Lazarus Group.
The risks associated with interacting with sanctioned entities like Tornado Cash are significant, as highlighted by the CEO of OKX. Users must be cautious when engaging with such platforms to avoid compliance issues and account suspension. The impact of sanctions on the usage of Tornado Cash further emphasizes the need for users to adhere to regulations and understand the implications of their interactions with crypto mixers.