In a report from TheBlock, the team behind the Ethereum (ETH) protocol Aave addressed the concerns about their address screening process. The decision to partner with compliance firm TRM Labs has been gaining a lot of attention after several high-profile personalities were blocked from accessing the platform.

These individuals and smaller users include TRON founder Justin Sun, Ethereum educator Anthony Sassano, CEO of Coinbase Brian Armstrong, and others. Over the weekend, these names were blocked from using Aave until an update to the platform’s frontend re-instated some with access to the protocol.
As Bitcoinist reported, the U.S. Department of the Treasury imposed sanctions on decentralized exchange Tornado Cash. This unleashed controversy in the crypto community and prompted some users to “dust”, and send small amounts of ETH to high-profile individuals as a form of protest, leading to some users being lockout by the protocol’s front end.
The team behind Aave confirmed that the address screening process is being implemented on the protocol’s website (frontend), but a deeper implementation would require community approval, according to the report:
The wallet monitoring here is only at the front-end layer, as for on-chain, contract-level [wallet monitoring] as it applies to the Aave Protocol, the Aave smart contracts are decentralized — no one person or entity can change, control, update or shut down the protocol. For any change to occur to the protocol, an AIP (Aave Improvement Proposal) would have to be proposed, voted on, and approved by the Aave DAO.
Via their official Twitter, the team behind the Ethereum protocol claimed that the address screening system has been implemented to provide users with more “security”. This system identifies all users that have interacted with Tornado Cash, including “dusted” addresses.
ETH’s price moving sideways on the 4-hour chart. Source: ETHUSDT Tradingview
Could Aave’s Actions Spell A Dark Future For DeFi Users?
The team behind the project confirmed that they implemented their address screening system following the U.S. Treasury sanctions on Tornado Cash. Aave claims that it will continue to mitigate any issues with this system and will continue testing the integration with TRM’S API.
In that sense, and in light of recent events, Aave said:
The Aave Protocol is and remains decentralized and governed by the DAO. We encourage the community to remain engaged and actively fight for equitable finance. The Aave team will continue to innovate. We encourage the community to remain engaged and actively fight for open and fair finance.
Several digital rights organizations and crypto think tanks have expressed their concerns about the sanctions imposed on Tornado Cash, and the consequences: developers arrested, users blocked from certain platforms.
Coin Center is one of the organizations questioning the Treasury’s decision as they believe it crossed a line and an important distinction between entities with the capacity to jeopardize the financial system and “neutral” technologies.

In a recent report, the organization claims that the sanctions are an “overstepped” of the institution’s legal authority. Coin Center revealed that it will cooperate with other organizations to “pursue administrative relief”, and potentially challenge the sanctions in court.