Preventing Crypto Sanctions in DeFi: How to Keep Bad Actors Out

Remanent by Phyllo
4 min readApr 11, 2023


Crypto Sanctions and the DeFi Industry: How to Prevent Bad Actors from Using Your Services

Today, Decentralized Finance (DeFi) has emerged as one of the most promising applications of blockchain technology.

By enabling peer-to-peer financial transactions without intermediaries, DeFi challenges traditional financial systems and opens new financial inclusion and innovation possibilities.

However, the decentralized nature of DeFi also presents significant challenges in terms of regulatory compliance and preventing illicit activities. The rise of DeFi has led to an increase in the number of sanctioned individuals and entities that use the anonymity of cryptocurrencies to evade regulations and engage in illegal activities.

Bad actors often use cryptocurrencies to engage in illegal activities, such as purchasing illegal goods and services on the dark web, funding terrorism, or laundering money obtained through criminal activities. Additionally, bad actors can exploit vulnerabilities in decentralized protocols to steal funds or manipulate the market.

Some examples of previous incidents involving bad actors in the cryptocurrency space include:

  1. The Silk Road Arrest: The Silk Road was an online marketplace for illegal drugs and other illicit goods and services. The site used Bitcoin as its primary form of payment and allowed buyers and sellers to transact anonymously. In 2013, the FBI shut down the Silk Road and arrested its founder, Ross Ulbricht.
  2. North Korean Hackers: North Korean hackers have been implicated in several cryptocurrency-related attacks, including the 2018 hack of the South Korean exchange Coinrail and the 2019 hack of the exchange Bithumb. These hackers are believed to use stolen cryptocurrency to fund the North Korean regime’s weapons programs.
  3. PlusToken Scam: In 2019, PlusToken, a cryptocurrency wallet, and exchange, was revealed to be a Ponzi scheme that defrauded investors of approximately $3 billion worth of cryptocurrency.
  4. Twitter Hack: In July 2020, hackers gained access to the Twitter accounts of high-profile individuals and companies, including Barack Obama, Elon Musk, and Apple, to promote a bitcoin scam that resulted in the theft of approximately $118,000 worth of bitcoin.

Why are bad actors a problem for DeFi Companies?

Bad actors pose a significant risk to DeFi companies and their users. As mentioned, bad actors can exploit vulnerabilities in decentralized protocols to steal funds, manipulate markets, and engage in illegal activities. This can lead to significant financial losses for users, reputational damage for DeFi companies, and legal and regulatory issues.

Moreover, DeFi companies have to comply with regulatory requirements to prevent money laundering, terrorist financing, and other financial crimes. Failure to comply with these requirements can result in significant fines, penalties, and reputational damage. Therefore, DeFi companies must implement measures to prevent bad actors from using their services and ensure compliance with regulatory requirements.

How can Remanent Help?

Remanent is building a suite of Identity and Risk Management tools to help DeFi companies prevent bad actors, hackers, and sanctioned individuals from misusing their services.

DeFi companies can integrate our platform using our APIs.

Our APIs provide a seamless integration process, enabling DeFi companies to ensure compliance without compromising the user experience.

Our platform offers several key benefits for DeFi companies:

  1. Preventing Bad Actors and Ensuring Compliance: Remanent helps DeFi companies prevent bad actors from using their services and ensure regulatory compliance. Hackers can exploit vulnerabilities to steal funds, manipulate markets, and engage in illegal activities. Using our platform, DeFi companies can reduce the risk of financial losses, reputational damage, and legal and regulatory issues.
  2. Fraud & Risk Detection: Remanent helps protect your cryptocurrency with our state-of-the-art fraud and risk detection tools. Our system scans your wallet for real-time suspicious activity, ensuring your transactions are secure. Stay one step ahead of potential threats with our advanced algorithms and 24/7 monitoring.
  3. Simple API Integration: Remanent can be integrated into DeFi products with our APIs, tailored to the specific needs of each company without compromising compliance or user experience.

In conclusion, bad actors pose a risk to DeFi and its users. Therefore, DeFi companies must prevent these bad actors and comply with regulations. Remanent is a product that can solve all problems via simple API integration.

Interested in using Remanent?

Schedule a call, and let’s get started!