In a report from TheBlock, the team behind the Ethereum (ETH) protocol Aave addressed concerns about their address screening process. The decision to partner with compliance firm TRM Labs has received a lot of attention after several high-profile personalities were blocked from accessing the platform.
These individuals and minor users include TRON founder Justin Sun, Ethereum educator Anthony Sassano, Coinbase CEO Brian Armstrong and others. Over the weekend, these names were blocked from using Aave until an update to the platform’s front end reinstated someone with access to the protocol.
As Bitcoinist reported, the US Treasury Department imposed sanctions on decentralized exchange Tornado Cash. This sparked controversy in the crypto community and caused some users to “dust” and send small amounts of ETH to high-profile individuals as a form of protest, leading to some users being banned from the protocol’s front end.
The team behind Aave confirmed that the address screening process is being implemented on the protocol’s website (frontend), but a deeper implementation will require community approval, according to the report:
The wallet monitoring here is only in the front-end layer, as for chain, contract level [wallet monitoring] as it applies to the Aave protocol, the Aave smart contracts are decentralized – no person or entity can change, control, update or shut down the protocol. For any change to take place in the protocol, an AIP (Aave Improvement Proposal) must be proposed, voted on and approved by the Aave DAO.
Via their official Twitter, the team behind the Ethereum protocol claimed that the address screening system has been implemented to provide users with more “security”. This system identifies all users who have interacted with Tornado Cash, including “dusted” addresses.
Could Aave’s actions spell a dark future for DeFi users?
The team behind the project confirmed that they implemented their address verification system following the US Treasury Department sanctions against Tornado Cash. Aave claims that it will continue to mitigate any issues with this system and will continue to test its integration with the TRMS API.
In that sense, and in light of recent events, Aave said:
The Aave protocol is and remains decentralized and governed by the DAO. We encourage the community to remain engaged and actively fight for a fair economy. The Aave team will continue to innovate. We encourage society to remain engaged and actively fight for an open and fair economy.
Several digital rights organizations and crypto think tanks have expressed concern about the sanctions imposed on Tornado Cash, and the consequences: developers arrested, users blocked from certain platforms.
Coin Center is one of the organizations questioning the Treasury’s decision as they believe it crossed a line and an important distinction between entities with the capacity to endanger the financial system and “neutral” technologies.
In a recent report, the organization claims that the sanctions are an “exceeding” of the institution’s legal authority. Coin Center revealed that it will work with other organizations to “pursue administrative relief,” and potentially challenge the sanctions in court.