(Bloomberg) -- US Treasury Department actions to shut the Tornado Cash crypto-mixing service may be “unconstitutional,” according to Jesse Powell, chief executive officer of the digital-asset exchange Kraken.
“People have a right to financial privacy,” Powell said during an interview with Bloomberg TV on Tuesday. “We’ll see if it survives a challenge” in court.
On Aug. 8, Treasury Department sanctioned Tornado Cash because of its use by criminals and the likes of North Korea to launder cryptocurrency. Mixers like Tornado cash can be used to obfuscate sources of coins by mixing different users’ tokens together. But while used by criminals, such services are also being used by some privacy-seeking, law-abiding consumers.
“The code repositories were taken down, a step I think was not necessary,” Powell said. “This is mostly a knee jerk, recently to what happened to UST and Luna.” Terra blockchain’s UST and Luna tokens collapsed in May, causing billions of dollars in losses.
Crypto industry advocacy Coin Center has said it is exploring challenging the government’s action in court. USDC stablecoin issuer Circle Internet Financial, which blocked Tornado Cash addresses, at the same time called banning Tornado akin to banning email because some bad actors had used it.
“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 said about Circle’s action. Kraken blocked Tornado-related accounts as well, he said.
Powell declined to comment on a New York Times report that said Kraken is under US investigation for suspected violations of Iran sanctions.
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