Kraken CEO Criticizes Tornado Cash Sanctions

Key learning points

  • Kraken CEO Jesse Powell has criticized the sanctions imposed on Tornado Cash by the US Treasury Department 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 associated with the Tornado Cash coin mixer.

Kraken Leader Defends Tornado Cash

Jesse Powell has criticized sanctions against Tornado Cash.

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

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

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

Instead, he suggested the sanctions were a “knee-shock response” and a “hasty response” to the TerraUSD collapse, adding that regulators overreacted with the intent of protecting the public.

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

Powell’s opposition to sanctions is expected given his opposition to past excessive regulation. In February, he criticized the Canadian government’s emergency measures targeting 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 the sanctions against Tornado Cash. CEO of Coinbase Brian Armstrong and Circle CEO Jeremy Allaire have also criticized the sanctions for targeting a tool rather than a person or entity.

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

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

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