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The major DeFi protocols of Ethereum have begun to limit the transaction capacity of wallet addresses that have interacted with Tornado Cash because of the US ban.
Update on the morning of August 14:
By the evening of August 13, Anthony Sassano said that Aave had unblocked his sassal.eth address. However, he claims to have not contacted the Aave team directly, which is a result of his post going viral on Twitter and receiving backlash from the community. This person also said that Aave has unblocked popular Twitter accounts that have been sent 0.1 ETH “dirty” in the past days.
I didn’t contact the Aave team and ask them to unblock me – all I did put out my original tweet as a social signal to make people aware that this was happening.
I believe the unblock applies to everyone that was dusted with 0.1 ETH from TC the other day.
— sassal.eth 🦇🔊🐼 (@sassal0x) August 13, 2022
In the official announcement later, Aave admitted that after Tornado Cash was punished, it integrated the TRM Labs API to block addresses that used to interact with the mixer connected to the front end interface. of project. However, this action inadvertently blocked wallets that had been sent dirty ETH. Aave has dealt with the above issue (but did not specify how), claiming the protocol remains decentralized and managed by the community.
4/8 We have been made aware that the API may have made incorrect calls about which wallet should be included in block-lists, in this case including those wallets that were sent “dusted” ETH by third parties interacting with the Tornado Cash contracts without consent.
— Aave (@AaveAave) August 13, 2022
Additionally, as revealed by Maker Rune founder Christensen, the developers and heads of top crypto and DeFi projects include Circle (USDC), Maker, Coinbase exchange, Uniswap, Aave, Compound, and dYdX had a meeting on how to approach the Tornado Cash case. Mr. Rune asserted that the reason the big boys had to sit together was because of the wave of anti-crypto users against the recent actions of DeFi protocols, fearing that the TC case would become a dangerous precedent.
— banteg (@bantg) August 13, 2022
Aave, Uniswap, Balancer are the next names to block the Tornado mixer
By the morning of August 13, many DeFi users reported that in turn leading DeFi protocols including Aave, Uniswap and Balancer had started blocking wallets that had interacted with Tornado Cash’s smart contract. Specifically, when accessing these platforms, users will receive a notification that their address is not allowed to connect to the project because it is associated with blocked activities. However, this is only a measure to limit access on the front end interface of the protocols instead of blocking from smart contracts.
when defi apps starts snitching on you, with links
2021-10-25 uniswap https://t.co/ym0wdNPJS6
2022-05-10 lace https://t.co/9588mTitKe
2022-06-29 balancer https://t.co/5V1FaxPUOn
2022-08-11 oasis https://t.co/GzkOQXXPb9
2022-08-12 aave https://t.co/vYY8MjqZ1p
(never) yearn, curve pic.twitter.com/1FkgVPnUqb
— banteg (@bantg) August 12, 2022
It is worth mentioning that the above DeFi protocols do not seem to distinguish the reason for using Tornado Cash, as the wallet address of Anthony Sassano, a famous Ethereum KOL and recently sent “dirty ETH” from TC, claims. also blocked by Aave.
sassal.eth now blocked from using the official Aave front-end because someone sent 0.1 ETH to my address via Tornado Cash pic.twitter.com/TGc9LJajVU
— sassal.eth 🦇🔊🐼 (@sassal0x) August 13, 2022
Similarly, TRON founder Justin Sun also claimed to suffer the same thing. Justin Sun is said to keep a lot of money on Aave.
Send that 0.1 ETH to Stani so that he can forward it to relevant authorities
— Curve Finance (@CurveFinance) August 13, 2022
Many people even joked that there is now a method to block other addresses from selling tokens on Ethereum by sending ETH from Tornado Cash there, because even though the website is down, the project’s smart contract is still working normally. TCs can now be “weaponized” in mutual attacks by blocking casual users’ access to large dapps.
The Tornado Cash incident is raising huge questions about the decentralized nature of DeFi projects with a country’s obligation to comply with the law. However, the stance of the crypto community on Twitter is that the US has been too strong with the ban, even a part of users have changed their avatars to the Tornado Cash logo to support the project.
Tornado Cash was “sealed” by the US
As reported by CHK, the news that caused a stir in the DeFi community this week was that the ETH mixer platform Tornado Cash (TC) was sanctioned by the US Department of Treasury on August 8, banning companies. American people and companies are associated with it.
Tornado Cash is a trading “mixer” platform that allows users to deposit ETH or supported ERC-20 tokens. The project will then mix this ETH and send it back to the user, essentially erasing almost completely the transaction traces of the funds to increase privacy. This is an open source and completely decentralized project, but is blocked by law just because it is used for bad purposes.
After the “lockdown” order from the US, many entities in the DeFi and blockchain array blocked TC, including Circle (the issuer of USDC stablecoins), RPC providers such as Infura and Alchemy, dYdX exchange, Oasis.app wallet … Many traditional technology platforms such as website host, GitHub, Discord, web host of the project DAO community, etc. have also stopped providing services for Tornado Cash.
Circle even froze the USDC contained in Tornado Cash’s wallet, sparking controversy over centralization. Maker’s stablecoin project DAI is considering removing USDC from the list of collateral assets to limit the risk of funds freezing.
The seriousness of the incident increased when on the afternoon of August 12, Dutch authorities arrested a developer of Tornado Cash. This information further confuses the DeFi community, not knowing if other developers or users who have interacted with TC are at risk of prosecution.
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