Over 250 cryptocurrency addresses have been blocked by Uniswap to date due to alleged links to illicit activities.
Once again, the decentralization of the largest DEX (Decentralized Exchange) in the crypto industry, Uniswap, has been called into question after it became known that more than 250 cryptocurrency addresses have been included in a blacklist, for being allegedly linked to illicit activities.
The information was released by the protocol's software engineer, Jordan Frankfurt, who revealed that at the moment, 253 cryptocurrency wallet addresses were blocked on Uniswap over the past 4 months, as a result of the work that the company developing the DEX has been carrying out with the blockchain research and intelligence firm TRM Labs.
Uniswap blocks US-sanctioned addresses
The measures, as detailed by Frankfurt in a post on GitHub, were necessary because the company that oversees the development of Uniswap and manages the website that provides a bridge to connect users to the protocol code, Uniswap Labs, is based in the United States, and is therefore subject to compliance with regulations established by the country's government.
In this regard, Frankfurt noted that a large part of the blacklisted addresses, which were blocked by Uniswap, are related to the Tornado Cash cryptocurrency mixer, which was sanctioned by the United States Treasury Department a few weeks ago, banning its use by US citizens and entities.
The measures imposed by the Treasury have led to the closure of the platform and unleashed a series of reactions against other privacy protocols, such as Aztec Network.
It may interest you: Why has the United States banned Tornado Cash?
Despite being considered a decentralized protocol, the most in-demand in the crypto industry, the software engineer clarified that providing its AMM (Automated Market Maker) services from its interface to users or entities sanctioned in the United States leads to non-compliance with the laws.
“If we offer our services (this website that interacts with the AMM protocol) to sanctioned people, we are breaking the law and key people related to that could go to jail. We choose not to take that risk.”, Frankfurt said in its publication.
ENS names among those blocked by Uniswap
According to Yearn Finance software developer Banteg, Uniswap Labs has created 7 different risk categories to identify addresses related to fraudulent activities. Using these risk categories, Uniswap Labs has blocked access to 30 addresses related to the ENS service (Ethereum Name Service). Banteg believes that most of these ENS addresses are legitimate and were blacklisted by Uniswap as collateral damage from TRM Labs.
AltCryptoTalk founder and CEO “AltCryptoGems” said the protocol was automatically verifying addresses interacting with its smart contracts before blocking any address in order to detect different categories of illegal activity.
For its part, Frankfurt had explained that Uniswap has been blocking only addresses that are directly sanctioned by the US government or, failing that, those that have directly received fraudulent funds from illicit activities, such as hacking, ransomware, scams, among others.
Frankfurt's comments were in response to a Github post by Micah Zoltu, in which he talks about the need to remove censorship from Uniswap's user interface. QuarkChain founder and CEO Qi Zhou commented that “As long as we live in the world of http:// protocols, we inevitably face the threat of censorship because those domains”.
Reaction to US sanctions on Tornado Cash
In July last year, Uniswap Labs took action against more than a hundred tokens citing regulatory concerns. In its blog, the company noted that it had Restricted access to more than 100 tokens from its website, as a preemptive to measures regulators were taking in the crypto space at the time.
On the other hand, the recent sanctions imposed by the United States government against the Tornado Cash platform have prompted several companies to block cryptocurrency addresses related to this platform. These companies include Circle, Alchemy and Infura, from Consensys. Even the crypto miner Ethermine, the largest on the Ethereum network, has stopped including transactions linked to the cryptocurrency mixer in its mined blocks.
Likewise, several protocol developers, such as MarkerDAO and Lightning Network, fear the retaliation that sanctions against Tornado Cash could provoke in their respective protocols.
Continue reading: Tornado Cash receives 75% of laundered funds on Ethereum
