OKX CEO Star Xu recently issued a warning to users about the potential risks associated with interacting with the crypto mixer Tornado Cash. Xu emphasized that deposits from sanctioned entities, such as Garantex and Tornado Cash, or withdrawals to these entities could trigger compliance risks and lead to account suspension. It was made clear that OKX strictly adheres to all relevant sanctions policies, particularly those from the US. As a result, the exchange does not onboard customers from the Specially Designated Nationals (SDN) List and cannot provide services to sanctioned individuals or entities.
Xu reiterated that OKX’s policy regarding sanctions was not new and had been in effect for some time. In his statement, he mentioned that if their sanctions controls are triggered due to deposits from or withdrawals to a sanctioned exchange or DeFi protocol like Garantex or Tornado Cash, the compliance team may freeze the related funds and off-board the account. This strict enforcement of sanctions policies is aimed at ensuring compliance with regulatory requirements and preventing any illicit activities on the platform.
The warning from OKX comes after a public appeal by a user known as Satoshi Friends, who urged exchange users from Commonwealth of Independent States (CIS) countries to withdraw their funds from the platform. The appeal highlighted the strict policies implemented by OKX, which have resulted in sudden account blocks, fund freezes, and asset losses for some users. Several influencers were reportedly affected by these actions, leading to blocked accounts and limited funds. Resolutions were only achieved after direct engagement with the OKX team, showcasing the challenges faced by users in complying with the platform’s policies.
OKX’s warning coincides with a recent Federal Reserve Bank of New York report that assessed the impact of US sanctions on Tornado Cash. The report revealed that the sanctions had 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 continued interest from retail users. Tornado Cash, founded in 2019 by Russian nationals Roman Semenov and Roman Storm, was sanctioned by the US Department of Treasury in 2022 for its involvement in laundering illicit funds from malicious actors like the North Korea-backed Lazarus Group.
By issuing this warning and enforcing strict sanctions policies, OKX aims to protect its users and maintain compliance with regulatory standards in the increasingly scrutinized crypto industry. It serves as a reminder of the potential risks involved in interacting with certain entities and the importance of staying informed about regulatory developments in the space.
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