Wednesday, October 5, 2022

dYdX Blocks User Accounts Tied to Tornado Cash

Leading decentralized exchange dYdX has confirmed it blocked users’ accounts that have interacted with the sanctioned Tornado Cash.

In the blog post sharing the development, dYdX said it partnered with a compliance vendor that identified the affected accounts.

This move comes after the US government through its Department of Treasury sanctioned the crypto mixer platform. The Treasury says the platform wasn’t doing enough to mitigate its use for criminal activities.

Consequently, US residents and businesses have been prohibited from using the platform unless expressly permitted.

The development makes dYdX part of a growing list that has boycotted the crypto mixer in compliance with sanctions from regulators.

In the post, the exchange admitted to blocking some accounts in error and subsequently unblocking such accounts. According to the exchange, these accounts had no links with the mixer app.

The mixer platform has been a ready tool for criminal elements to obfuscate the trail of their transactions. This makes it difficult for authorities to track this stolen money.

Impact of the sanctions on Tornado Cash on the Crypto ecosystem

Interestingly, the crypto community has expressed mixed reactions concerning the US sanctions on Tornado Cash. While many feel it is a breach of free speech, others supported the ban and are already complying.

Due to the need to abide by regulatory requirements, many firms have begun to block transactions related to Tornado Cash. This move by other players to the sanctions will have a broader repercussion on the cryptosphere.

In response to the sanctions Circle, the issuer of USDC stablecoin blacklisted accounts linked to Tornado Cash. Over $75,000 of user funds were frozen in the process. 

Elsewhere, GitHub has deleted several accounts related to Tornado Cash. Similarly, two of Ethereum’s most used node providers, Alchemy and Infura have also restricted access to Tornado Cash.

With the rising number of crypto firms complying with the sanctions, users with links to Tornado Cash will be affected. These users will have no access to some parts of the crypto ecosystem.

Due to the restrictions placed on Tornado Cash, its native token TORN has nosedived to new lows. It now trades at $17.20, down 11.72% over the past 24 hours according to data from CoinMarketCap.

Joyce Onose
A Blockchain enthusiast and growing writer in the space with an understanding of the importance in creating quality content for readers in the industry. Also, keen on using her skills in improving Blockchain journalism.

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