When recalls are made on the source chain using the function recallMessage(), it calls the onMessageRecalled() function on the ERC20Vault contract. The onMessageRecalled() function transfers the ERC20 tokens back to the user along with any Ether that was supplied.
The issue is with this dual transfer where both ERC20 tokens are Ether are transferred to the user in the same call. If the user is blacklisted on the canonical token, the whole call reverts, causing the Ether to be stuck in the Bridge contract.
To understand this, lets consider a simple example:
