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Jesse Powell, the CEO of US-based cryptocurrency exchange Kraken, says the government agency’s move to shut down the crypto mixing service Tornado Cash could be deemed “unconstitutional.”
Powell highlighted this during an interview with Bloomberg on Tuesday, echoing remarks by crypto-focused non-profit Coin Center that the ban infringed on consumer rights.
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Powell: the sanctions are ‘unconstitutional’
Earlier this month, the US Treasury Department sanctioned crypto mixing service Tornado Cash, linking the crypto mixer to various money laundering schemes and crypto heists. The price of the native token TORN fell after the news.
In a commentary following the move against Tornado Cash by the Office of Foreign Assets Control (OFAC), Coin Center said the ban “curtailed the rights of all Americans.”
According to the blockchain advocacy group, OFAC adding autonomous decentralised code to a ban list was a first and “a hair-raising precedent.” Indeed, a developer connected to the mixing service was arrested in Amsterdam, Netherlands – eliciting an outcry from across the crypto industry.
“I think that what they’ve done might be unconstitutional,” Powell told Bloomberg, adding that the sanctions’ impact on people’s rights woold likely form the basis of Coin Center’s push to mount a court challenge.
The Kraken chief, who also acknowledged his company would be freezing Tornado Cash transactions (as has happened with other platforms), also explained why he expects the sanctions to be challenged:
“You know, I think that people have a right to financial privacy, and there are a lot of legitimate people using the service for legitimate financial privacy reasons. And I think we’ll see if this survives a challenge.”
Powell also commented on the Canadian government’s crackdown on protesters by shutting down bank accounts and targeting crypto addresses. In his view, such a development filtering into the US portends a scary scenario.
He expects a constitutional challenge to the Tornado Cash sanctions will end with people getting back their rights.
“I hope that people get their right to publish code, and that code turns out to be speech and money turns out to be speech. And everyone has a right to spend their money – however they want.”
On the question of Kraken also being under investigation for sanctions violations, Powell said it was all speculation arising from events dating back to 2019.
While he refrained from noting specifics regarding recent reports, Powell agreed that the exchange has been and continues to engage the US Treasury on matters regulation.