Uniswap works in parallel with blockchain tracking firm TRM Labs Users have already reported blocking specific addresses on the exchange.
The decentralized exchange Uniswap has taken a step contrary to the “decentralization” they encourage by blocking user addresses that they consider involved in illegal activities.
The number of addresses that got obstructed so far on Uniswap remains unknown. However, there are already users highlighting this situation on social media. Such was the case of the tweeter @0x9fd, who revealed a screenshot showing the error message thrown by the system regarding an address.
The message said that the address in question got linked to one or more blocked activities. The tweeter accompanied the image with a brief comment showing a bit of advice against using Uniswap.
The novelty arises from the agreement approached by the leading developer of the protocol, Uniswap Labs, with the blockchain activity tracking firm TRM Labs. In their FAQ section, Uniswap Labs explains that they receive data from TRM Labs, which mixes on-chain data and real-world research to detect financial crimes and other harmful activities.
Within the same section of its website, Uniswap Labs clarified that the blocking of an address occurred because it was identified as an address probably connected to illicit behavior.
In that sense, the entity claims not to expect many flaws, but flaws are always possible. When a user wants to appeal the blocking of one of their addresses, they will require to contact the compliance division to intervene in the procedures to unblock their wallet address.
Increased Regulatory Pressure Against User Privacy
Uniswap is not the first platform to yield to regulatory pressures intending greater pówer over the movements of funds of users.
This week Binance, the exchange with the most significant trading volume in the world, began to obstruct the activities of Russian users on its network.
Meanwhile, international organizations such as the Financial Action Task Force tries stricter regulation procedures for bitcoin and the world of digital assets in general. Just a few days ago, the FATF highlighted in a report that it would be more strict about strengthening controls on the industry, alleging a strong stance against illegal behavior regarding finances.
According to the document, only 9% of member countries apply appropriate policies and regulatory procedures for virtual asset service providers such as bitcoin (BTC) and other digital assets (VASP) to reduce the risks of illegal activities.
The move by Uniswap did not get well- received in the cryptocurrency ecosystem. In theory, being a decentralized protocol, it should be free of censorship and open financial systems for everyone.
By: Jenson Nuñez
