Why Justin Sun Was Blocked From This Ethereum DeFi Protocol

Diplomat and founder of the TRON network, Justin Sun, confirmed that one of his addresses was blocked from using the Ethereum decentralize finance (DeFi) protocol Aave. Via Twitter, Sun claimed that he received 0.1 ETH from Tornado Cash leading to his address being added and blocked by the protocol.

Justin Sun was just one of many well-known personalities in the crypto industry, and outside the space, that received funds from Tornado Cash. Over the past week, high-profile individuals have been sent funds from the Ethereum decentralized exchange following the sanctions imposed by the U.S. Treasury Department.

Justin Sun, Ethereum educator Anthony Sassano, CEO of Coinbase Brian Armstrong, NBA legend Shaquille O’Neal, and TV personality Jimmy Fallon received 0.1 ETH seemingly as a form of protest against the sanctions. The measures taken by the U.S. Treasury have set a dangerous precedent, according to privacy, crypto, and technology advocates.

As Bitcoinist reported, Tornado Cash was added to the Foreign Assets Control (OFAC) Specially Designated Nationals And Blocked Person List (SDN). A mechanism used to punish terrorists, and other dangerous individuals, not tools or technologies, as stated by Jerry Brito, Executive Director at Coin Center.

Aave and other Ethereum DeFi protocols implemented a mechanism to block certain addresses from interacting with their platforms. The mechanism was created in collaboration with compliance firm TRM Labs to lock out entities suspected of violating the U.S. imposed financial sanctions.

Year Finance core developer “Banteg” shared a timestamp list with more data on when these protocols implemented their “address screening feature”, a tool that many consider a violation of the users’ privacy. The list is comprised of decentralized exchange Uniswap, lending protocol Balancer, Aave, and others.

when defi apps started snitching on you, with links

2021-10-25 uniswap https://t.co/ym0wdNPJS6
2022-05-10 ren 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

Justin Sun said the following when he found out that his address was blocked from the Ethereum DeFi protocol:

Sending Tornado Cash eth to Jimmy Fallon, Brian Armstrong, Paul Logan, Shaquille O’Neal is fine since none of them is using defi application. But don’t send it to me (…).

Justin Sun’s Aave Lockout Highlights Treasury’s ”Clumsy approach to Tornado Cash”?

At the time of writing, there are reports about Aaave and other protocols updating their websites to unblock Justin Sun and other individuals affected. Anthony Sassano confirmed this via his Twitter handle:

I didn’t contact the Aave team and ask them to unblock me – all I did was 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 Tornado Cash (TC) the other day.

As mentioned, Coin Center is not the only organization expressing concern about the sanctions. In a press release, the non-profit organization defending private citizens’ digital rights “Fight For The Future” classified the sanction as “clumsy”.

Furthermore, the non-profit claims that the Treasury has engaged in an act of censorship against Tornado Cash and its developers. The press release claims:

Let us be clear, hackers and cybercriminals, as well as those that support them, are deplorable and should be stopped—but not in a way that compromises human rights and the first amendment.

Fight For The Future forecast a dark possibility for similar projects as they believe the sanctions against Tornado Cash could operate as “a warning shot” for those creating privacy tools based on cryptocurrencies. In that sense, they believe the sanctions can be interpreted as an attack on the U.S. first amendment: free speech.

Fight For The Future said: Tornado Cash is code, and the Treasury sanctioned code. The organization understands code as a form of speech, making the sanctions a direct attack against that right.

ETH’s price coming into heavy resistance on the 4-hour chart. Source: ETHUSDT on Tradingview