As crypto advances, the pressure on cryptocurrency exchanges to tighten security against illicit activities and enhance compliance has doubled. Platforms like OKX must continually strengthen compliance and security measures to align with the changing tides.
However, platforms like Tornado Cash, a decentralized currency mixer, have reportedly made these efforts increasingly futile as they aid users in obscuring illicit crypto transactions.
To strengthen financial integrity and compliance with international sanctions, Star XU, OKX’s CEO, warned the exchange’s users against patronizing Tornado Cash. Xu said any OKX account discovered interacting with Tornado Cash would be closed.
Xu stressed that OKX will close the accounts of users who deposit funds from sanctioned entities, like Garantex and Tornado Cash, into OKX. The same applies to users trying to withdraw funds from OKX to these entities.
He added that any of such transactions would trigger the exchange’s risk control mechanisms. In response, OKX will terminate the account related to such accounts.
OKX issued this warning after receiving a backlash from a user called Satoshi Friends. Satoshi Friends urged his community and OKX users from the Commonwealth of Independent States (CIS) countries to quickly withdraw their funds from the exchange.
The users also advised their community to quit using OKX altogether, expressing concerns over the exchange’s strict policies and recounting their personal experiences.
Satoshi Friends warned that users could suddenly have their funds frozen, blocked accounts, or, worse, lose their assets. He also said that OKX had restricted the accounts of some influencers and limited their funds until direct intervention with the support team.
XU’s Response and Potential Risk of Interacting with Sanctioned Platforms
Responding to Satoshi Friends’ call, Xu indicated that the user must have engaged in multiple transactions involving sanctioned exchanges. However, he added that OKX had permitted the user to withdraw their legitimate funds before blocking the account.
Additionally, he explained that OKX did not accept transferring user data from an old account to a new one. Doing so would breach the company’s compliance policy and could be seen as an attempt to bypass regulations.
Xu further stressed the importance of maintaining compliance standards. He clarified that OKX does not accept customers on the Specially Designated Nationals (SDN) list and cannot offer services to such individuals or entities.
Authorities have legally prohibited people or entities on that list from participating in legal transactions because they engaged in serious crimes. Hence, by not accepting such customers, OKX will avoid legal and reputational risks associated with sanction violations.
Tornado Cash Aids Money Laundering
Over the years, criminals have patronized Tornado Cash to move stolen funds from crypto protocols. These incidents have raised concerns among crypto firms, security entities, and individual users who risk losing their digital assets.
Recently, an attacker used Tornado Cash to launder stolen funds from various protocol hacks. On August 7, Peckshield reported that the Rain crypto exchange hacker moved 1,155 Ether worth approximately $2.6 million to Tornado Cash.
Disclaimer: The opinions expressed in this article do not constitute financial advice. We encourage readers to conduct their own research and determine their own risk tolerance before making any financial decisions. Cryptocurrency is a highly volatile, high-risk asset class.
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