- dYdX called the blocking of accounts abidance to their compliance policies.
- Tornado Cash has been flagged for being associated with illicit transactions.
- At the time of writing, the native token TORN had dropped by almost 45% in just two days.
The decentralized non-custodial privacy solution existing on Ethereum landed in a world of trouble this week after the United States Treasury and Office of Foreign Asset Control (OFAC) placed an outright ban on the platform.
Having not only ordered citizens against using the services, but the government also laid down similar rules for crypto businesses to not associate with the platform. Since then, dYdX has become the first Decentralised Exchange actually to make a move against it.
dYdX after Tornado Cash
In a blog post issued yesterday, the DEX explained the reason behind the Tornado Outage on the platform to its customers.
As the OFAC blacklisted Tornado Cash for being a part of some of the most popular hacks in the history of crypto, including the $625 million Axie Infinity Ronin Bridge attack where Tornado was used as a means to move the stolen funds around.
However, beyond this, due to its privacy policies, Tornado became a staple for criminals. Thus to put an end to the possibility of the same being funded from within the country, the OFAC made it mandatory to stay away from Tornado Crash.
Consequently, a significant amount of people, due to their affiliation with Tornado Cash, also observed their accounts being blocked off by dYdX, about which the DEX had this to say.
“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.”
Tornado in a Terrible Storm
As the crypto facilitator platform faced bans from the OFAC, things began unraveling, and within the span of just three days, the native token of the platform TORN fell to new lows.
Dropping by more than 45%, TORN could be seen trading at $16.3, down from $30 less than a week ago.
The losses faced by investors due to this sudden blacklisting are unparalleled, as this 45% drop in price cannot be recovered by any means since the platform is blocked for good.
And now, with the crypto exchanges DeFi and non-DeFi alike doing this, it is about to get worse for TORN going forward.