OKX CEO Star Xu confirmed that the exchange plans terminate user accounts found engaging with sanctioned entities like Tornado Cash and Garantex.
Xu responded to a user’s public call on X, warning others about the risks of using the exchange.
In his post, Xu clarified that any accounts depositing funds from or withdrawing to sanctioned entities would trigger compliance risk controls, leading to account closure. He highlighted Russian exchange Garantex and crypto mixer Tornado Cash as examples of such entities.
This statement followed a complaint from a user, Satoshi Friends, who warned that users from the Commonwealth of Independent States might face account blocks, frozen funds, and asset loss. Satoshi Friends claimed his account, along with a long-standing referral base, had been blocked.
Xu responded by explaining that Satoshi Friends’ account was discontinued due to “significant transactions related with sanctioned exchanges or DeFi protocols.” He added that while the user was allowed to withdraw clean funds, OKX could not facilitate the transfer of account data to a new account, as it would bypass the exchange’s compliance policies.
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Nevertheless, the news sends an important message to crypto businesses. OFAC itself reiterated that digital asset institutions should take a risk-based approach to sanctions compliance to detect flaws in internal controls.
Tornado Cash, a crypto mixer known for obfuscating cryptocurrency movements, has been labeled problematic or illegal by various regulators. The service was recently linked to the movement of 14,500 ether, worth $35.2 million, stolen in the Nomad Bridge exploitation.
Tornado Cash developer Alexey Pertsev was recently denied bail in the Netherlands after being sentenced to over five years in prison on money laundering charges.
Tornado Cash is a decentralized protocol that provides privacy for transactions on the Ethereum blockchain, allowing users to make anonymous transfers. While private financial transactions are legal, Tornado Cash has been exploited by some users for money laundering.
One of the judges characterized Tornado Cash as primarily a tool for criminal activity, which played a key role in Pertsev’s conviction.
