The platform also mistakenly blocked accounts, whose owners might not have known about the origin of the funds, and they were subsequently restored

dYdX exchange blocks Tornado Cash-related accounts

11.08.2022 - 11:40

363

2 min

What’s new? dYdX, a decentralized cryptocurrency exchange, blocked users whose addresses interacted with Tornado Cash, a cryptocurrency mixing service, which was put on the sanctions list by the US Office of Foreign Assets Control (OFAC) on August 8. In an official blog post, the exchange’s representatives noted that they are working with a compliance solutions provider that flags unwanted wallets.

dYdX’s blog post

What else is known about the exchange’s actions? The company noted that it has blocked many accounts because a certain part of the funds in them, often even insignificant amounts, “were associated at some time with Tornado Cash.” Representatives of dYdX also reported that they mistakenly banned several accounts that did not interact with Tornado Cash directly and may not have known the origin of the funds transferred to them.

“We have made adjustments, within the limits of our compliance policies, that have unbanned certain accounts and we will continue to make efforts to limit flagging and track this issue moving forward,” dYdX added.

The blog notes that the exchange does not have the ability to seize and confiscate customer funds. Users can withdraw deposited funds from the protocol and keep them on their own, dYdX stressed.

Blocking of Tornado Cash. The sanctions list means a complete ban on the use of the service in the United States. According to OFAC, more than $7 billion in total has been laundered using Tornado Cash since its inception in 2019. The mixer has already been removed from the GitHub hosting service, Circle, the issuer of the USDC stablecoin, has frozen more than 75 000 coins associated with the mixer’s sanctioned addresses.

Uniswap protocol founder Hayden Adams said that OFAC’s actions were “a big freedom of speech” and privacy issue. He criticized the blocking of the entire service because of the actions of individuals. The developers of the anonymous cryptocurrency Zcash from Electric Coin Company also noted that this precedent could negatively affect the civil liberties of Americans.

Author:

Vasiliy Smirnov Vasiliy Smirnov

Subscribe to Getblock Magazine and stay up to date with the latest news from the world of cryptocurrencies and the digital economy