Uniswap, one of the main decentralized finance exchanges in the cryptocurrency world, is now taking measures to ensure illegal funds cannot be transacted using its platform. The company has already started blocking addresses linked to “blocked activities” and will apply a filter with data provided by TRM Labs, a blockchain analysis firm that focuses on detecting illegal activities.
Uniswap scans addresses interacting with its interface
Uniswap, the decentralized finance exchange, has taken action to curb illegal activities conducted using its platform. The exchange has now introduced address filtering procedures that register addresses using its official interface. These addresses are then checked against a blacklist provided by TRM Labs, a blockchain company that provides transaction monitoring services.
While the extent of these measures is still unknown, in its address-screening FAQ, Uniswap explains the kind of activities it wants to exclude from taking advantage of its services. It states:
We intend to block only wallets held or associated with clearly illegal behavior such as: sanctions, terrorist financing, hacked or stolen funds, ransomware, human trafficking and child sexual exploitation material (CSAM) .
The exchange has not provided the pool of addresses that will be blocked from using its official frontend, and it is unknown if it will do so in the future.
Affected Users
While these new measures were announced last week, some users have already reported being touched by them. When users attempt to exchange currency using a reported address, they receive a message stating:
This address is blocked in the Uniswap Labs interface because it is associated with one or more blocked activities.
The Uniswap Labs team leaves a door open for users who believe they have been wrongly flagged to report their cases to find out if the block can be lifted.
The news was received negatively by a large swathe of the cryptocurrency community, but it is in line with what other decentralized finance services have done in matters of compliance. Tornado.cash, one of the biggest mixing protocols, is now blocking transactions from Ethereum addresses listed as sanctioned by the U.S. Office of Foreign Assets Control (OFAC) using an oracle contract provided by blockchain security firm Chainalysis.
However, users pointed out that blocked addresses can also use other interfaces or interact directly with Uniswap or Tornado.cash contracts to circumvent this.
