Justin Sun Received 0.1 ETH From Tornado Cash – Banned by Aave

Justin Sun received 0.1 ETH from Tornado Cash from an unauthorized source and got promptly banned by DeFi Protocol Aave. He also stated that he mistakenly interacted with authorized Ethereum-based crypto mixer Tornado Cash. Because of this, he got his wallet blocked.

Justin Sun said on Twitter on Saturday that the Ethereum-based DeFi protocol Aave has effectively blacklisted his address after receiving 0.1 ETH through Tornado Cash from an unauthorized source.

I’m officially blocked by @AaveAave since someone sent 0.1 eth randomly from @TornadoCash to me. @StaniKulechov pic.twitter.com/tNXNLNYZha

— H.E. Justin Sun🌞🇬🇩 (@justinsuntron) August 13, 2022

United States Sanctions Tornado Cash

As we reported previously the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury recently sanctioned Tornado Cash for assisting criminals in the laundering of crime profits, including those from crimes against victims in the United States.

The restrictions were put in place after hackers used the cryptocurrency mixer as a center for money laundering, draining at least $1.4 billion through DeFi bridges and other crypto hacks since the year’s beginning.

Soon after the sanctions, an unidentified user delivered 0.1 ETH to prominent crypto companies, well-known crypto personalities, celebrities, and random traders using a Tornado Cash contract address that had been banned, possibly in an effort to make fun of the U.S. Treasury.

PeckShield, a blockchain security company, reports that Tornado Cash was sent to more than 600 addresses. Binance, FTX, Beeple, Brian Armstrong of Coinbase, Justin Sun, sifu.eth, and Ukraine Crypto Donation are on the list.

Muddy Decentralization?

Unexpectedly, at least five decentralized protocols, such as Uniswap, Balancer, and dYdX, have prohibited individuals who arbitrarily got the ETH airdrop from the blacklisted wallet along with those who had previously dealt with Tornado Cash, leading some cryptocurrency users to doubt the idea of decentralization.

If cryptocurrency values fall, the restriction may potentially lead to issues with liquidation. This is due to the fact that prohibited DeFi customers who have ongoing loans will be unable to increase liquidity and manage their Loan-to-Value (LTV) to prevent forced liquidation.

Response From Aave

The Aave team said on Twitter that certain users were unable to use the Aave app since they recently merged TRM’s API with the platform’s IPFS front-end.

The protocol states that the integration aids in the identification of wallets that engaged with Tornado Cash contracts following the penalties. The API, however, performed improper calls and blacklisted wallets that uninvitedly got ETH from the mixer contracts.

Justin Sun received 0.1 ETH from Tornado Cash for which he was banned by Aave. Now, Justin Sun and other customers were able to get back into their accounts when the problem was fixed, according to the Aave team.