dYdX Unblocks Tornado Cash Linked Accounts

dYdX Unblocks Tornado

Cryptocurrency derivatives trading platform dYdX said it has unblocked some users’ accounts with funds linked to Tornado Cash, and apologies for mistakenly suspending some that never directly engaged with the controversial mixer.

dYdX said that it had “unbanned certain accounts” that it had previously blocked in response to the Office of Foreign Assets Control of the United States Treasury Department adding Tornado Cash to its list of Specially Designated Nationals (SDNs). Americans are not allowed to conduct crypto transactions with the platform and its related addresses.

The platform announced that it was aware of the significant increase in accounts flagged by their compliance provider that were subsequently blocked by the company in a Wednesday blog post. 

“This sudden influx of flags affected many account holders that never directly engaged with Tornado Cash, and often such users do not realize the origin of the funds transferred to them during various transactions prior to interacting with our platform, but we must nevertheless maintain certain restrictions,”

dYdX emphasised that it did not have the ability to seize customer funds. Users of the platform could always withdraw and maintain custody of their funds in all circumstances. But it has the ability to put users’ accounts in close-only mode on their hosted matching engine.

A number of crypto trading platforms have blocked access to Tornado Cash after the U.S. Treasury Sanction.

The consortium founded by Coinbase and Circle, who are behind USD Coin (USDC) stablecoin, has since blacklisted wallets that have been in use by Tornado Cash, and has froze upwards of $75,000 USDC from unsuspecting users. Tornado Cash co-founder Roman Semenov has also reported developer platform GitHub suspending his account in a tweet on August 8, 2022.

dYdX users might sense familiarity as it was not the first time the platform has been impacted by U.S. regulations. Last year, dYdX airdropped its DYDX token to early users, but those based in the U.S. were excluded. It was speculated that dYdX left U.S. residents out on purpose to avoid SEC accusations of the platform offering unregistered securities.

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