Decentralized Finance Crypto Exchange Uniswap Starts Blocking Addresses Linked To ‘Blocked Activities’

Uniswap, one of the major decentralized financial exchanges in the cryptocurrency world, is now taking steps to ensure that illegal transactions using its platform cannot take place. The company has already started blocking addresses associated with “blocked activity” and will apply a filter with data provided by TRM Labs, a blockchain analytics company that specializes in detecting illegal activity.

Uniswap checks addresses interacting with its frontend

Uniswap, a decentralized financial exchange, has taken steps to crack down on illegal activity taking place using its platform. The exchange has introduced address verification procedures that register addresses using its official frontend. These addresses are then compared to a blacklist provided by TRM Labs, a blockchain firm that provides transaction monitoring services.

While the extent of these measures is not yet known, in its FAQ on address verification, Uniswap explains the type of activity it wants to exclude from using its services. It states:

We intend to block only those wallets that belong to or are associated with clearly illegal behavior, such as: sanctions, terrorist financing, hacked or stolen funds, ransomware, human trafficking and child sexual abuse material (CSAM).

The Exchange has not provided a pool of addresses that will be blocked for use of its official frontend, and it is unknown whether it will do so in the future.

Affected Users

Although these new measures were announced last week, some users have already reported being affected by them. When users try to exchange currency using the marked address, they receive a message saying:

This address is blocked in the Uniswap Labs interface because it is associated with one or more blocked actions.

The Uniswap Labs team leaves the door open for users who believe they have been flagged in error, allowing them to report their cases to see if the blocking can be removed.

The news has been negatively received by much of the cryptocurrency community, but it is consistent with what other decentralized financial services have done in terms of compliance. Tornado.cash, one of the largest mixing protocols, is now blocking transactions from Ethereum addresses on the U.S. Office of Foreign Assets Control (OFAC) sanctions list using an oracle contract provided by blockchain security company Chainalysis.

However, users noted that blockchain addresses could also use other frontends or interact directly with Uniswap or Tornado.cash contracts to get around this.

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