Red Flags in DeFi Transactions

DeFi transactions present sanctions risks that are distinct from centralized exchange activity. These red flags indicate potential exposure to sanctioned entities or evasion techniques.

DeFi-specific red flags

• Mixer interaction: Wallet has interacted with Tornado Cash, Blender.io, Sinbad, or other designated mixer contracts.
• Sanctioned protocol usage: Wallet has interacted with designated DeFi protocols' smart contracts (even indirectly via router contracts).
• Privacy-chain activity: Wallet bridges assets to privacy-focused chains (Monero via atomic swap, Aztec, etc.) before or after interacting with your protocol.
• Flash-loan structuring: Using flash loans to move value through protocols without leaving a clear transaction trail — potential sanctions evasion technique.
• Multi-hop routing: Transaction routed through 5+ DeFi protocols in a single transaction bundle — complexity may obscure the ultimate beneficiary.