Crypto Exchange dYdX Blocked Accounts That Received Even Small Amounts From Tornado Cash

Many users were locked out even though they had no idea they had received funds from the crypto mixer.

AccessTimeIconAug 11, 2022 at 9:37 a.m. UTC
Updated May 11, 2023 at 4:23 p.m. UTC
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Cryptocurrency exchange dYdX said it blocked user accounts with even a token link to Tornado Cash, the crypto-mixing service sanctioned Monday by the U.S. Treasury Department.

The Treasury Department's action led to a significant increase in accounts flagged by dYdX's compliance provider, which is used to highlight accounts potentially associated with ransomware, malware, child sex abuse material, known criminals and sanctions lists, the company said in a blog post.

The dYdX accounts were subsequently blocked even though the owners may never have directly engaged with Tornado Cash. Users do not necessarily know the origin of the funds transferred to them, the exchange said.

"Many accounts were blocked because a certain position of the wallet's funds (in many cases, even immaterial amounts) were associated at some time with Tornado Cash," dYdX said.

According the Treasury Department, Tornado Cash was used by the Lazarus Group, a North Korean hacking group it tied to the $625 million hack of Axie Infinity's Ronin Network in March. Tens of millions of dollars have flowed through the mixer, which was designed to obscure the origin of funds.

DYdX asked users who think their accounts have been wrongly blocked to contact its compliance team.

CoinDesk has requested further comment from dYdX.


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Jamie Crawley

Jamie Crawley is a CoinDesk news reporter based in London.

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