DeFi protocols including Aave, Uniswap, Balancer, and others have allegedly banned wallets that have interacted with Tornado Cash, bringing decentralization under attack. TRM Labs' centralized dataset seems responsible for the accounts being banned.
Many decentralized applications on the Ethereum network have changed their code to block access from "sanctioned" addresses. Aave, Uniswap, Ren, Oasis, and Balancer are the currently identified protocols. Banteg from Yearn pointed out the GitHub repositories in question in an early Saturday morning Tweet.
The “address screening” implementation is driven by TRM Labs, a compliance company offering services to dApps via an API. According to a page on the TRM Labs website, the tool is applicable for "new Russia-related designations."
However, given the Office of Foreign Asset Control’s (OFAC) decision to sanction all Tornado Cash addresses with ties to the North Korean hacker group Lazarus, users who have interacted with Tornado Cash now appear to be labeled as "sanctioned" and thus barred from platforms that use TRM Labs' API.
The sanctions do not apply to addresses associated with Russia but to any user, including US citizens, who has ever received funds from a Tornado Cash address.
Following the recent dusting attack on high-profile addresses like Brian Armstrong, Justin Sun, and several venture capital firms, it appears they have been blocked from Aave, Uniswap, and the other TRM Labs-powered applications.
Tron founder Justin Sun raised the issue in a tweet, claiming that he is now unable to interact with Aave. Sun tweeted that Aave had blocked his account after he received 0.1 ETH from a random Tornado Cash account.
According to the text on the screenshot Sun shared with the tweet, his address is blocked on app.aave.com due to its association with one or more blocked accounts.
Over 600 ENS addresses that received 0.1 ETH from Tornado Cash have also met with the same fate, according to PeckShieldAlert.
While many have criticized GitHub's decision, no one expected a decentralized platform not directly subject to US regulations to block addresses connected with Tornado Cash.
