Tornado Cash Sanctions Criticized by Kraken’s CEO Jesse Powell

Tornado Cash Sanctions Criticized by Kraken’s CEO Jesse Powell
  • Jesse Powell, called the federal restriction on Tornado Cash, “unconstitutional.” 
  • Uniswap’s creator emphasized his opinion that there was a gap in the market.

Tornado Cash, a crypto privacy mixer, gained notice last week when it was sanctioned by the U.S. Treasury Department. The sector as a whole is beginning to realize the gravity of the penalties, and this has prompted many to wonder what exactly compliance entails.

There may be unforeseen effects to the current penalties against Tornado Cash.  They seem like they’re trying to do the right thing and put an end to evil, but they might really end up causing more problems than they solve.

Kraken’s CEO, Jesse Powell, called the federal restriction on Tornado Cash, “unconstitutional.” On Tuesday, he told Bloomberg that “people have a right to financial privacy” and that he thinks the sanctions won’t hold up under legal scrutiny.

Need for Legitimate Privacy Solutions

The U.S. Treasury Department announced the action on August 8, saying it was necessary because criminals have laundered more than $7 billion worth of virtual money since its establishment in 2019 using the privacy mixer. While around $7 billion has been routed via the anonymity tool, blockchain detectives Elliptic estimate that just $1.5 billion of that cash is really illicit.

According to Powell, the prohibition was “mostly a knee-jerk” reaction to the collapse of the Terra ecosystem in May, and the removal of Tornado’s source code from Github, where it was initially housed, “was not necessary.”

With his criticism of the sanctions, Powell adds his voice to the chorus of crypto supporters who have spoken out against them. When asked about the need for legitimate privacy solutions, Uniswap creator Hayden Adams emphasized his opinion that there was a gap in the market.

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