OKX CEO Star Xu has issued a warning to users regarding the potential risks of interacting with the sanctioned crypto mixer Tornado Cash. In a statement made on August 9 through the social media platform X, Xu highlighted that deposits from sanctioned entities such as Garantex and Tornado Cash, as well as withdrawals to these entities, could result in compliance risks that may lead to account suspension. Emphasizing OKX’s commitment to adhering to all relevant sanctions policies, including those from the United States, Xu made it clear that the exchange does not onboard customers from the Specially Designated Nationals (SDN) List and cannot provide services to sanctioned individuals or entities. It is worth noting that this policy is not new and has been in place for some time.
Following Xu’s warning, a user named Satoshi Friends, representing users from Commonwealth of Independent States (CIS) countries, urged exchange users to withdraw their funds from the platform. This appeal was based on strict policies enacted by OKX that resulted in sudden account blocks, fund freezes, and asset losses. The user claimed that these actions had a significant impact on several influencers, leading to blocked accounts and limited funds, with resolutions only obtained through direct engagement with the OKX team.
OKX’s warning coincides with a report from the Federal Reserve Bank of New York assessing the effects of US sanctions on Tornado Cash. The report revealed a noticeable impact on the usage of the crypto mixer, with larger pools on the platform failing to fully recover to pre-sanction levels. However, smaller pools showed some signs of recovery, indicating sustained interest from retail users. Tornado Cash, established in 2019 by Russian nationals Roman Semenov and Roman Storm, came under scrutiny in 2022 when the US Department of the Treasury imposed sanctions on the platform for its involvement in laundering illicit funds exceeding $7 billion from entities like the North Korea-backed Lazarus Group.
The risks associated with interacting with sanctioned entities such as Tornado Cash should not be taken lightly, as evidenced by the actions taken by OKX and the impact of US sanctions on the crypto mixer’s operations. Users must exercise caution and be aware of the compliance risks involved in such transactions to avoid potential account suspension and financial losses.
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