Kraken CEO made an appearance on Bloomberg TV on Tuesday, where he objected to the recent Treasury Department's crackdown on Tornado Cash. During the interview, he suggested that there had been many legitimate users of the service. “People have a right to financial privacy,” Powell affirmed.
“We’ll see if it survives a challenge” in court, Kraken CEO said, referring to the Treasury’s decision being legally challenged by Coin Center, a crypto-focused think tank. The organization announced on Monday that it’s weighing the option to sue the US regulator for exceeding its statutory authority.
Tornado Cash, a decentralized crypto mixing service, was sanctioned by the U.S. Treasury on August 9 for allegedly laundering billions worth of crypto since its inception in 2019, including $455 million coming from the Axie Infinity heist perpetrated by the North Korean hacker group Lazarus. The crackdown that followed the announcement was swift and painful: one of Tornado Cash devs was arrested in Amsterdam, stablecoin issuer Circle froze 75,000 USDC in sanctioned wallets, and the project’s account was suspended at GitHub, a code hosting platform.
“Having a digital currency that’s so controlled and able to be controlled by maybe unconstitutional government action is a little bit scary, too,” Powell commented on Circle’s decision. At the same time, he confirmed that, despite his objections, Kraken would block Tornado-related accounts.
“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 journalists.
The CEO declined to comment on the reports of Kraken being under the US investigation for alleged violation of Iran sanctions.