OKX to close accounts interacting with Tornado Cash

OKX chief operating officer Star Xu warned account holders against Tornado Cash (TORN), saying any interaction with the platform would result in a ban.

In a statement posted on X, the CEO announced that any users who have been previously sanctioned will not be allowed to open new accounts on OKX. Moreover, per the statement, the crypto exchange will close down accounts of users making deposits from sanctioned entities such as Tornado Cash and Garantex.

OKX appears to be enforcing these measures to comply with global laws, limiting crypto mixers’ use. Entities such as Tornado Cash have been in the cross hairs of regulators all around the globe, who claim that crypto mixers are commonly used to transact illicit funds and are the favored tools of international criminal networks, in addition to rogue states such as North Korea who have also been found to have used such services.

With respect to Tornado cash and the OKX hack, the crypto exchange is trying to regain users’ trust following a series of security vulnerabilities that caused them to lose funds in June. 

According to a crypto.news report, two OKX users experienced substantial financial losses in a suspected SIM-swapping attack.

Blockchain security firm Slowmist suspected the incident originated from a flaw in the exchange’s two-factor authentication (2FA) system, which led to unauthorized access to their accounts.

The security incidents have shaken confidence in OKX. The crypto exchange is now trying to regain the community’s trust by following global regulatory laws.

Earlier this year, the United States House of Representatives proposed a bill, dubbed the Blockchain Integrity Act, to ban crypto mixers for two years. The bill, introduced by Democratic Party member U.S. representative Sean Casten, aims to prohibit virtual asset service providers and other registered money service businesses from accepting funds routed through a mixer or allowing withdrawals directly to a mixer’s address. Any breach of this rule will incur a civil penalty of up to $100,000.

The House’s sentiment about Tornado Cash was also echoed by the European Union, which voted in April to force the monitoring of non-custodial wallets while banning crypto mixers and privacy coins.

With the regulatory headwinds pointing towards a resolution—if not outright ban—on crypto mixers, entities such as Tornado Cash and exchanges that allow their tokens to be traded and listed may soon be listed within the echelons of black market crypto.