Following the U.S. sanctions this week, the exchange took decisive measures to block Tornado Cash-related crypto addresses. Decentralized crypto exchange dYdX said it was now blocking users who had interacted recently with Tornado Cash .
“Many accounts were stopped because a portion of the wallet’s funds (in some cases even immaterial amounts), were associated at one time with Tornado Cash,” dYdX stated today in a Blog post.
Tornado Cash is an Ethereum-based service that hides users’ deposits and withdrawal activity through the implementation of zero-knowledge proofs.
An undisclosed number users accounts were found to have been blocked. These users “never directly interacted with Tornado Cash and are often unaware of the origin of funds that were transferred to them.”
Since then, the project has amended its compliance policies in order to identify and filter out fraudulent accounts.
According to the blog posted Thursday, Tornado Cash addresses would be flagged as well as those associated with ransomware and malware, as well sexual content related to minors and wanted criminals.
Decrypt reached to dYdX to comment on the story but did not receive a reply at the time it was published.
On Monday, the U.S. Treasury Department placed Tornado Cash on the blacklist for allegedly aiding money laundering activities totalling $7 billion.
Some of the alleged funds were obtained from the $100,000,000 Harmony Protocol hack in June by North Korea’s Lazarus Group, and $7.8 Million from the Nomad bridge break last Wednesday, among other sources.
The Crypto community has been outraged by the Treasury’s decision, which has caused a lot of concern among a population that is very sensitive to privacy rights.
“I don’t believe it was appropriate at any time,” said Preston Van Loon , Ethereum core developer. “Tornado cash is a tool that can be used for good and bad, just like any other.