Users identified as interacting with prohibited entities, such as the Tornado Cash mixer or the Russian exchange Garantex, will be permanently banned from OKX.

This declaration was made by CEO Star Xu in response to allegations from a user who claimed that OKX had “suddenly locked their account, freezing all assets and making them unrecoverable.”

OKX

The user, known as Satoshi Friends on X (formerly Twitter), a notable Key Opinion Leader (KOL), publicly urged people in the Commonwealth of Independent States (CIS) to cease using OKX and to withdraw all their crypto assets after his account was unexpectedly locked.

Satoshi Friends accused OKX and CEO Star Xu of “secretly” altering the usage policy for CIS citizens in May 2024, which led to his account being locked and his assets frozen, making them impossible to withdraw. He also reported that friends of his faced similar issues.

Although OKX eventually reopened the account and permitted the withdrawal of all assets within a specified period after the support team was contacted, Satoshi Friends insisted that “I am not the only one… many other users, including KOLs who are CIS citizens, will experience similar issues in the future.”

In response to these accusations, Star Xu stated that Satoshi Friends was deliberately misleading the public with false information. Prior to making his accusations public, the user had contacted the CEO of OKX directly and was informed that his account had been locked due to transactions involving banned exchanges or DeFi protocols listed on the Specially Designated Nationals (SDN) list by the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC).

OKX then agreed to reopen the account to allow Satoshi Friends to withdraw his assets within a given timeframe before permanently locking the account again. However, when Satoshi Friends requested the transfer of all trading data from the existing account to a new one, this was perceived as an attempt to “circumvent” OKX’s compliance regulations, which may have led to the misleading allegations against the exchange.

CEO Star Xu clarified:

OKX does not promote or permit account openings for individuals or organizations listed on the SDN.

Accounts are only locked and assets frozen if there is verified interaction with banned platforms, such as the Russian exchange Garantex, which was sanctioned by OFAC in 2022 for its involvement in illegal money laundering, and the Tornado Cash mixer.

The vast majority of OKX users do not fall under these categories and therefore will not be affected by such sanctions.

As widely known, Tornado Cash is a cryptocurrency mixer that was sanctioned by the U.S. Treasury Department in August 2022. Officials accused the service of facilitating up to $7 billion in money laundering for malicious actors, including the infamous North Korean hacking group Lazarus Group, which laundered approximately $455 million in illicit funds through Tornado Cash.

Following the sanctions, the Tornado Cash founding team faced serious legal repercussions. In mid-May 2024, Alexey Pertsev was sentenced to 5 years and 4 months in prison in the Netherlands for money laundering and is currently appealing the sentence.

Roman Storm, another co-founder, was arrested in the United States in August 2023 on similar charges, though he pleaded not guilty to all accusations. He was released on a $2 million bail shortly after his arrest and is now seeking to have all charges dismissed. The third co-founder, Roman Semenov, remains a fugitive.

Despite these sanctions, Tornado Cash continues to be a favored tool among major hacking groups. A report from July 2024 indicated that the amount of cryptocurrency sent to this illegal protocol surged by 50% in the first half of this year compared to the same period in 2023.

Earlier this week, the blockchain security firm PeckShield identified that an address linked to the Nomad cross-chain bridge hack had transferred 14,500 ether (equivalent to $35.2 million) of stolen cryptocurrency into Tornado Cash to obscure the transaction trail.

Source: https://analysis.unich.com/okx-announces-it-will-lock-user-accounts-if-interaction-with-tornado-cash-is-detected/