DeFi protocol Aave bans Justin Sun after he accidentally received 0.1 ETH from Tornado Cash

DeFi protocol Aave bans Justin Sun after he accidentally received 0.1 ETH from Tornado Cash

Decentralized protocol Aave has banned the wallet address of Justin Sun, founder and CEO of the Tron blockchain project, for unknowingly interacting with the sanctioned Ethereum-based crypto mixer Tornado Cash.

On Saturday, Justin Sun took to Twitter to confirm that Ethereum-based DeFi protocol Aave had officially blocked his address after an unknown person sent him 0.1 ETH from Tornado Cash.

US Sanctions Tornado Cash

Remember that the US Treasury Department’s Office of Foreign Assets Control (OFAC) recently sanctioned Tornado Cash for helping bad actors launder the proceeds of crime, including those committed against victims in the US

The sanctions come after the crypto mixer became a hub for money laundering by hackers who drained at least $1.4 billion from DeFi bridges and other crypto hacks since the beginning of this year.

Shortly after the sanctions, an unknown user sent 0.1 ETH from a blacklisted Tornado Cash contract address to major crypto-related firms, popular crypto figures, celebrities, and random traders, perhaps in an attempt to mock the US Treasury Department.

According to blockchain security firm PeckShield, more than 600 addresses received 0.1 ETH from Tornado Cash. The list includes Binance, FTX, Beeple, Coinbase’s Brian Armstrong, Justin Sun, sifu.eth and Ukraine Crypto Donation.

Decentralization in the mud?

Surprisingly, at least five decentralized protocols, including Uniswap, Balancer, and dYdX, have blocked those who accidentally received ETH airdrops from the blacklisted wallet along with those who previously interacted with Tornado Cash, prompting crypto users to question the concept of decentralization.

The ban could also cause liquidation issues if crypto prices crash. This is because blocked DeFi users with active loans will not be able to access their accounts to add liquidity and manage their Loan-to-value (LTV) to avoid foreclosure.

Some people believe that the ban is apparently on the front-end, and users can still access their accounts through a command-line interface (CLI) or by forking the project to create their own front-end interface. Still, it is beyond the technical knowledge of average DeFi users.

Aave answers

The Aave team writes in a Twitter thread noted that they recently integrated TRM’s API into the platform’s IPFS frontend, which is why some users were having trouble accessing the Aave app.

According to the protocol, the integration helps identify wallets that interacted with Tornado Cash contracts after the sanctions. However, the API made incorrect calls and blocked wallets that received ETH from the mixer contracts without consent. The Aave team said the issue was resolved and Justin Sun and other users regained access to their accounts.

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