DYdX, the decentralized trading platform, has just announced that it has blocked the accounts of its users who interacted with the Tornado Cash protocol in order to comply with recent sanctions issued by OFAC. However, the platform seems to have difficulties in sorting out those who have interacted with the protocol and those who have received funds that simply passed through it.
DYdX blocks accounts linked to Tornado Cash
The trading platform dYdX has announced via a press release that it has blocked all accounts that have interacted with the Tornado Cash protocol in the past, with no minimum amount.
This announcement follows the recent blocking of the cryptocurrency mixer by the Office of Foreign Assets Control (OFAC), accusing it of facilitating the laundering of more than $7 billion in cryptocurrencies, including the massive $625 million Ronin sidechain hack last March.
In particular, dYdX says it makes use of “compliance providers” to monitor funds passing through the platform and ensure they are not referenced in ransomware, malware or sexual exploitation of minors cases. According to the statement, a “significant increase” in the number of accounts could be observed following the sanctions recently decided by OFAC.
According to dYdX, some user accounts were wrongly blocked because they may have received funds that were passed through Tornado Cash without coming directly from it. As such, the accounts concerned have been unblocked. The platform thanks its customers for their understanding, mentioning an “unprecedented event”.
The hecatomb continues
The very recent OFAC decision is already fraught with consequences, however: within days, Circle, the USDC issuer, said it had frozen $75,000 worth of the stablecoin on various addresses, stating that it was only “complying with the sanctions requests.”
In the wake of Tornado Cash’s blacklisting, some people were quick to point out the impossibility of banning an application whose code is open source, since it is by definition replicable and infinitely transformable.
And yet, even the GitHub platform, where the code in question was hosted, decided to take action by deleting it, as well as the various accounts of developers who worked on the project. This raises the question of whether this kind of decision is really measured, since the code in question is not incriminating, unlike the use that can be made of it.
For Matthew Daniel Green, an associate professor of computer science who specializes in applied cryptography, this is an attack on citizens’ rights:
“For the record, I am not in favor of North Korea laundering stolen money. […] But I’m also not in favor of governments stepping in and destroying all the services that allow users to protect their transaction history from being read by the world.”
