Mar 4, 2022 - Economy

Russia sanctions rock DeFi banking apps

Illustration of an app shaped like a briefcase with a dollar sign on it waiting to download

Illustration: Sarah Grillo/Axios

In the wake of new Russia sanctions, users of some so-called decentralized finance apps and services in Iran and Venezuela found themselves unable to access their digital assets on Thursday.

Why it matters: In theory, Web3 is supposed to provide a safe haven from geopolitical concerns. But in practice, dApp users are finding there are limits to decentralization.

What happened: Popular ethereum wallet MetaMask went down for users in Venezuela, while NFT marketplace OpenSea provided 404s to Iranian users.

  • The Venezuela outage happened because Infura, the blockchain infrastructure MetaMask is built on, “mistakenly configured the settings more broadly than they needed to be.” (Of note: Both Metamask and Infura are developed by Consensys.)
  • MetaMask service in Venezuela has been restored, but a Consensys spokesperson said regions where Infura remains blocked include Iran, North Korea, Cuba, Syria, and the Crimea, Donetsk, and Luhansk regions.

Meanwhile, multiple OpenSea users with Iran-based IP addresses reported being blocked from accessing their collections on the service.

  • Unlike MetaMask users, those affected by the OpenSea ban are unlikely to regain access anytime soon.
  • In a statement to Axios, a spokesperson writes: “OpenSea blocks users and territories on the U.S. sanctions list from using our services – including buying, selling, or transferring NFTs on OpenSea."

The intrigue: All of this raises questions about how decentralized the most popular crypto platforms truly are. And, on top of that, if sanctions can effectively ban users from accessing them in another part of the world.

  • And if that's the case, how different, really, is DeFi from traditional, centralized finance?
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