Address Blocking and TRM Labs

TL;DR
DAO should be consulted on blocking addresses.

As people may have seen. Addresses have been getting blocked on the AAVE (front-end) platform if they “are associated with sanctioned persons and terrorist financing”. As a result of this, many accounts are getting dusted from people sending them money from Tornado Cash.

After much distress, AAVE “fixed” this issue. It turns out they use TRM Labs to scan for supposed illegal or sanctioned activity (AKA the use of TC).

I have a few issues with this.

  1. The DAO was never consulted on what it considers sanctioned persons and terrorist financing.
  2. It was never consulted on if address blocking should even be allowed.
  3. It was never consulted on whether to use TRM Labs
  4. AAVE is supposed to be decentralized.

Many people use AAVE outside of America with different laws, taxes, regulations, and sanctions

China has blocked access to all domestic and foreign cryptocurrency exchanges and ICO websites - does this mean every account associated with Coinbase and Binance should be banned?

Laos is the second highest country in regards to money laundering/terrorist financing “risk” according to a 2019 study. Should all people from Laos be banned?

It seems AAVE, especially regulation wise, is (becoming?) heavily tailored towards being compliant with specific countries’ regulations, however, as a decentralized platform it needs to be tailored towards the people using it.

If you made it through reading this, thank you. I wrote this to get a feel for if people agree or not and to potentially propose a vote on removing the banning of addresses- or at least creating an official vote that states the terms the DAO would agree to regarding blocking addresses.

2 Likes

Hello,

Aave is supposed to be decentralized, but aave “canonical” front-end isn’t. It’s a centralized website, relying on a decentralized front-end. Canonical front-end is not OUR front-end. So, technically, I don’t see any problem in banning some adresses from the front-end

But I agree with you when it comes to compliance : Aave (and other protocols) sent a very poor message to DeFi users. It basically means “game is over, time to submit”, and I don’t like it…

1 Like

Couldn’t agree more. Regardless of what you think of the address screening issue, it is the DAO’s decision. It seems there is a lack of clarity as to who owns the protocol front-end, and I find this very troubling. I would urge everyone to divorce themselves entirely from any entity that seeks to exert centralized control over the AAVE protocol, including developers.

Pull the frontend code from github, rollback to the latest pre-screwup git commit, and host the website locally yourself. This is truly unacceptable, and we should be raising our voices about it.

That makes more sense. I’d like Aave to have specified that those accounts are only banned from using their front end- not from using the Aave protocol entirely (aka through etherscan or others)