dYdX confirms blocking user accounts tied to Tornado Cash

Quick Take

  • dYdX said it banned user accounts with a history of using Tornado Cash.
  • The exchange also clarified that it inaccurately blocked several accounts, which it later unblocked.

Derivatives protocol dYdX confirmed on Thursday morning that it blocked user accounts that previously interacted with Tornado Cash, in line with new US sanctions.

dYdX added in a blog post that it is working with a "compliance vendor" that flagged certain accounts that had received funds from the Tornado Cash app. 

Tornado Cash, a privacy and transaction mixing service on Ethereum, has been in the spotlight in recent days after the protocol was sanctioned by the US Treasury. 

In the blog post, dYdX wrote: "Many accounts were blocked because a certain portion of the wallet’s funds (in many cases, even immaterial amounts) were associated at some time with Tornado Cash, which was recently added to the sanctions list by the U.S."

The exchange, though, clarified that it inaccurately banned several accounts, which had to be reversed. dYdX noted that these users hadn't directly engaged with Tornado Cash and that they may not have known the origin of the funds transferred to them.

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