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Kraken CEO Criticizes Tornado Cash Penalties

Kraken CEO Criticizes Tornado Cash Penalties

Key points to remember

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

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Kraken CEO Jesse Powell has spoken out against 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 a interview with Bloomberg Television today that individuals “have a right to financial privacy” and said that many people use Tornado Cash for legitimate reasons.

He also questioned whether the sanctions would survive a constitutional challenge, referring to The map of the Coin Center suing the Treasury and OFAC for free speech.

However, Powell thinks the community’s response may be overdone. He said that although the dismantling of Tornado Cash GitHub code was unnecessary, he does not see these events as a sign of a broader attack on open source projects.

He instead suggested that the sanctions were a “gut reaction” and a “hasty response” to the collapse of TerraUSD, adding that regulators overreacted with the intention of protecting the public.

Powell also confirmed that, despite his objections, Kraken will block transactions to and from addresses linked to Tornado Cash addresses. “We will prohibit withdrawals to all Tornado-associated addresses and likely freeze all funds originating from a Tornado address,” Powell told Bloomberg.

Powell’s opposition to sanctions is expected given his past resistance to excessive regulation. In February he critical Canadian government emergency measures that targeted crypto 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 sanctions against Tornado Cash. Coinbase CEO Brian Armstrong and CEO of Circle Jeremy Allaire also criticized the sanctions on the grounds that they target a tool rather than a person or entity.

The US Treasury first imposed sanctions on Tornado Cash addresses on August 8. A 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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