Kraken CEO Criticizes Tornado Cash Sanctions

Kraken CEO Criticizes Tornado Cash Sanctions thumbnail

Jesse Powell objects to sanctions against Tornado Cash, but his exchange must comply with the law.

Key Takeaways

  • Kraken CEO Jesse Powell has criticized sanctions imposed upon Tornado Cash by the U.S. 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.

Kraken CEO Jesse Powell has objected to recent U.S. sanctions against addresses tied to 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 that 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 the Treasury and OFAC to court over freedom of speech.

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

Rather, he suggested that the sanctions were a “knee-jerk reaction” and a “hasty response” to TerraUSD’s collapse, 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 related to Tornado Cash addresses. “We would prohibit withdrawals to any addresses associated with Tornado and we would likely freeze any funds coming in from a Tornado address,” Powell told Bloomberg.

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

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

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

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

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