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As the crypto industry expands, exchanges like OKX face mounting pressure to strengthen compliance and prevent illicit activities on their platforms.
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In a stern announcement aimed at reinforcing financial integrity and improving compliance measures with international sanctions, OKX CEO Star Xu declared that any accounts on the OKX exchange found to be interacting with Tornado Cash would be terminated.
The announcement comes in response to escalating concerns about using Tornado Cash, a decentralized mixing service that enables users to obfuscate the origin and destination of their cryptocurrency transactions. While Tornado Cash is popular among privacy-conscious users, it has also been exploited by malicious actors to launder stolen funds.
Compliance crackdown
Xu emphasized that if users deposit money from sanctioned entities such as Garantex and Tornado Cash into OKX accounts or attempt to withdraw funds from OKX to these entities, the exchange’s risk control mechanisms will be triggered, resulting in account closures. “We are required to comply with applicable sanctions policies, including US sanctions,” Xu stated.
The warning was issued following a public call from a user named Satoshi Friends, who urged his community and users from the Commonwealth of Independent States (CIS) countries to urgently withdraw all funds from OKX and cease using the exchange indefinitely.
He cited the exchange’s stringent policies and personal experiences, claiming that users risk facing sudden account blocks, fund freezes, and asset losses. Satoshi Friends mentioned that several influencers had their accounts blocked and funds limited, with partial resolution only occurring after direct intervention with the OKX team.
Response to user concerns
In response, Star acknowledged that the user’s account had multiple significant transactions related to sanctioned exchanges or DeFi protocols. Star noted that the user had been allowed to withdraw his clean funds before blocking his account.
Related: Tornado Cash sanctions effective, reveal Ethereum weakness: NY Fed
However, OKX refused to transfer the user’s data from an old account to a new one, citing that it would violate their compliance policy and be a potential workaround.
Star reiterated the importance of compliance, noting that OKX does not onboard any customer on the Specially Designated Nationals (SDN) list and cannot offer services to sanctioned persons or entities.
He reassured the majority of users that they are unlikely to be affected by these measures because they are far from those sanction programs and will never conduct transactions related to a sanctioned person.
Tornado Cash has recently been used to launder stolen funds from different protocol hacks. On Aug. 7, the hacker behind the attack on the Rain crypto exchange began laundering 1,155 Ether ETH through Tornado Cash.
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This article first appeared at Cointelegraph.com News
