Uniswap now blocks some crypto wallets for illegal activity

    23 Apr 2022
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    In partnership with TRM Labs, Uniswap Labs is now blocking crypto wallets that are found to be engaged in illegal behavior. The move reveals a trend in the DeFi sector of blocking crypto addresses sanctioned by the US Treasury Department.

    Uniswap Labs, the Uniswap decentralized exchange protocol’s main developer, has begun blocking crypto wallet addresses that are found to be engaged in illegal activity from its app’s frontend.

    Recently, Uniswap Labs partnered with the blockchain analysis firm TRM Labs for this initiative, a recently updated FAQ section of its website said. However, it is unclear how many wallet addresses have been blocked to date.

    TRM Labs flags crypto wallets for Uniswap that are likely to be linked to illegal behavior such as sanctions, terrorism financing, hacked or stolen funds, ransomware, human trafficking, and child sexual abuse material.

    Tornado Cash uses Chainalysis’s on-chain oracle or smart contract to block crypto addresses sanctioned by the Office of Foreign Assets Control (OFAC) – an enforcement agency of the US Treasury Department.

    “We remain committed to developing products in a way that provides a safe, transparent, and robust financial infrastructure that can empower users around the world,” the firm said.

    Uniswap Labs went on to say that it does not control TRM Labs or their independent determinations about risk categories and wallet addresses. “Please also note that their determinations, or ours, are not being reported to law enforcement,” it added.

    The latest move comes in line with a certain blocking trend in the DeFi sector, especially after the Treasury Department’s recent action of sanctioning a crypto address.

    Similarly, Tornado Cash, a popular Ethereum mixer, last week started blocking crypto wallet addresses sanctioned by the OFAC from its app’s frontend.

    The department also sanctioned an address linked to the recent $625 million theft from the Axie Infinity’s Ronin bridge, alleging that it is tied to the North Korean hacking group Lazarus.

    But Uniswap’s ban, as well as Tornado Cash, is acting at the frontend level. That means its protocol can still be used by all wallets on alternative hosted websites.

    Back in March, blockchain-data analytics company Chainalysis announced a fast-tracked launch of two free screening tools to help provide sanctions oversight to the crypto industry.

    The screening tools, including an on-chain oracle, are new tracking software that will assist exchanges in screening wallets and transactions for activities that are skirting economic sanctions.

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