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Decentralized cryptocurrency exchange dYdX said in a recent blog post it has started blocking accounts flagged by its compliance provider for contacting with sanctioned crypto mixer Tornado Cash.

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The exchange declined to elaborate about how exactly its provider decides which account should be flagged or not, but acknowledged that "many accounts were blocked because a certain portion of the wallet’s funds were associated at some time with Tornado Cash."

dYdX added that "sudden influx" of red flags affected many account holders that "never directly engaged" with the mixer and often wallet holders don't realize the origin of the funds. The exchange claims it has made "adjustments" to unban certain accounts. It's unclear though how many accounts are still blocked.

Tornado Cash User Sends ETH to Addresses of Crypto Industry Representatives

Earlier, the US Department of the Treasury's Office of Foreign Assets Control sanctioned crypto mixer Tornado Cash for laundering over $7 billion worth of crypto since 2019.

The regulator said that the smart contract helped North Korean hackers Lazarus Group launder $455 million of stolen crypto. Moreover, Tornado Cash reportedly helped launder over $96 million from the Harmony bridge heist as well as $7.8 million from the Nomad bridge hack.

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