According to a recently released report, decentralized exchange (dex) Uniswap has blocked approximately 253 cryptocurrency addresses allegedly linked to criminal or government sanctions. This information was discovered by software developer Banteg, who analyzed and saved shared logs from Uniswap’s servers.
30 of the 253 blocked addresses were ENS domain names, Uniswap labeled seven risk factor categories
On August 19, Banteg, a software developer and contributor to Yearn Finance, publishedTwitter threadclaiming that Dex’s Uniswap blocks 253 crypto addresses.” Uniswap provided an unusual level of transparency.” Banteg stated regarding “front-end censorship via TRM Labs. “Uniswap partnered with TRM Labsin mid-April and the company will blacklist crypto addresses that may be associated with sanctions and crypto crimes.
The same month, areport was displayed showing that a few innocent Uniswap users were affected reportedly affected by TRM Labs’ gated front end. At the time, no one was certain about the exact number of crypto addresses blacklisted by Uniswap’s TRM Labs-gated front-end; according to Banteg, there are 253 addresses and 30 addresses are ENS domain names. The developer also noted that there are seven risk factor categories and two risk levels.
“Bad” addresses are checked for both ownership and being a trading partner, which can contribute to blocking.” Banteg wrote . According to Banteg, this data “was never intended to be publicly available,” but developers “will have an exclusive look at the very first [TRM Labs] leak, courtesy of Uniswap.”
Smart contracts and code are defi, not the web platform that hosts them
This news follows the recent the U.S. government has banned Tornado Cash after Tornado Cash, a mixed protocol for Ethereum that leverages CoinJoin and ZKsnark technology, was banned;after Tornado Cash was banned, an open source developer was arrested Github code was erased Contributors to the Tornado Cache Github codebase were suspended and the project’s Discord server was Deleted .
However, the Coin Center, a nonprofit that focuses on policy issues facing crypto assets, believes that the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) has “overstepped its legal authority.” the Coin Center is working with the Tornado Cash studying the legality of the ban and plans to “engage” with OFAC to discuss the issue.
While Uniswap is updating the front end of the TRM Labs gate, there are likely many more crypto companies and decentralized finance (Defi) protocols that are following the same measures. For example, on August 8, Bantegrevealed revealed that Center Consortium, a stablecoin issuer operated by Circle Financial and Coinbase Global, had blacklisted 75,000 USDC owned by Tornado Cash users.
“I think this is the first case of a pool being frozen, not an individual account,” Banteg said at the time.
The problems surrounding Tornado Cash and the precautions taken by defi teams like Uniswap expose the fundamental weaknesses of so-called “decentralized finance” protocols and whether or not they are truly decentralized.
Even before Tornado Cash was banned by the U.S. government, Tornado Cash developers used Chainalysis’ Oracle contract to blacklist Ethereum addresses on the OFAC list. Additionally, in July 2021, users criticized Uniswap for blocking over 100 tokens from the main interface.
During both of these instances, crypto users discussed how they could simply leverageTornado Cache code or Uniswap’s smart contracts andmirror siteswere discussed to get around this kind of limitation. The fact is that Uniswap is a US-registered company and the front end, or website, is owned by a US entity. In time, people may want to clarify that the defi web portal is not decentralized, and that only smart contracts and code can be classified as such.
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