OKX CEO, Star Xu, recently issued a warning to users about the potential risks associated with interacting with the sanctioned crypto mixer, Tornado Cash. He emphasized that deposits from sanctioned entities such as Garantex and Tornado Cash, or withdrawals to these entities, could trigger compliance risks and ultimately lead to account suspension. Xu highlighted the fact that OKX strictly adheres to all relevant sanctions policies, particularly those from the US, to ensure the platform remains compliant. This means that OKX does not onboard customers from the Specially Designated Nationals (SDN) List and cannot provide services to sanctioned individuals or entities.
Xu clarified that the warning regarding interactions with sanctioned exchanges or DeFi protocols was not a new policy but a measure that has been in effect for some time. He stated that if OKX’s sanctions controls are triggered due to deposits from or withdrawals to a sanctioned entity, such as Garantex or Tornado Cash, the compliance team has the authority to freeze the related funds and off-board the account. This strict enforcement of existing policies is aimed at ensuring that OKX remains in compliance with all relevant regulations related to sanctions and financial transactions.
The warning issued by OKX CEO follows a public appeal by an X user known as Satoshi Friends, who urged exchange users from Commonwealth of Independent States (CIS) countries to withdraw their funds from the platform. According to Satoshi Friends, OKX has implemented strict policies that have resulted in sudden account blocks, fund freezes, and asset losses for users. Influencers were particularly affected by these actions, with their accounts being blocked and funds limited. Resolutions were only achieved after direct engagement with the OKX team, indicating the seriousness of the compliance measures being implemented by the exchange.
The warning from OKX also comes in light of a report by the Federal Reserve Bank of New York that assessed the impact of US sanctions on Tornado Cash. The report highlighted the significant impact that sanctions had on the usage of the crypto mixer, with larger pools on the platform failing to fully recover to pre-sanction levels. However, smaller pools have shown some signs of recovery, indicating ongoing 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 facilitating the laundering of over $7 billion in illicit funds from malicious actors like the North Korea-backed Lazarus Group.
The warning issued by OKX CEO regarding the risks associated with using Tornado Cash underscores the importance of compliance with sanctions policies and regulations in the cryptocurrency industry. Users are urged to exercise caution when interacting with sanctioned entities to avoid potential account suspension and fund freezes.