Kraken CEO Criticizes Tornado Cash Penalties

Kraken CEO Criticizes Tornado Cash Penalties

key takeaways

  • Kraken CEO Jesse Powell criticized the sanctions placed on Tornado Cash by the US Treasury and OFAC.
  • On Bloomberg TV, he suggested that Tornado Cash has legitimate uses and that users have a right to privacy.
  • Powell confirmed that Kraken will block transactions related to Tornado Cash addresses despite his objections.

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Kraken CEO Jesse Powell has objected to recent US sanctions against addresses linked to the Tornado Cash coin mixer.

Kraken Leader Defends Tornado Cash

Jesse Powell has criticized the sanctions against Tornado Cash.

Powell argued in an interview with Bloomberg Television today that people “have a right to financial privacy” and said many people are using Tornado Cash for legitimate reasons.

He also questioned whether the sanctions would survive a constitutional challenge, referring to Coin Center’s plan to take Treasury and OFAC to court over free speech.

However, Powell believes the community’s response may be overdone. He said that while Tornado Cash’s GitHub code decommissioning was unnecessary, he doesn’t see these events as a sign of a broader attack on open source projects.

Rather, he suggested that the sanctions were a “knee-jerk reaction” and “hasty response” to the collapse of TerraUSD, adding that regulators overreacted in an attempt to protect the public.

Powell also confirmed that despite his objections, Kraken will block transactions to and from addresses related to Tornado Cash addresses. “We would prohibit withdrawals to any addresses associated with Tornado and would likely freeze funds coming from a Tornado address,” Powell told Bloomberg.

Powell’s opposition to sanctions is expected given his past resistance to excessive regulation. In February, he criticized the Canadian government’s emergency measures targeting cryptocurrency exchanges. That same month, he refused to freeze Russian accounts at the request of Ukrainian Deputy Prime Minister Mykhailo Fedorov.

Powell is not the only crypto leader to criticize the sanctions against Tornado Cash. CEO of Coinbase bryan amstrong and Circle CEO Jeremy Allaire have also criticized the sanctions claiming that they target a tool rather than a person or entity.

The US Treasury first imposed sanctions on Tornado Cash addresses on August 8. One developer, Alexey Pertsev, was arrested by Dutch authorities in the Netherlands on August 12.

Disclosure: At the time of writing, the author of this article owned BTC, ETH, and other cryptocurrencies.

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