Image credit to CNBC article

The crypto community has witnessed the downfall of one of the most innovative and successful crypto projects in the space – Tornado Cash

Tornado Cash was undoubtedly one of the best platforms to perform anonymous transactions. As such, it became a hotbed for hackers, illegal funds and other money laundering activities, resulting in the U.S. Treasury imposing sanctions on the platform.

According to Shark Tank host and millionaire venture capitalist Kevin O’Leary, “Clamping down on crypto applications that mess with the primal forces of regulation is necessary.” In a discussion on Crypto Banter on Saturday, August 11 2022, O’Leary went on to add that platforms like Tornado Cash are part of the crypto cowboy culture and should be eliminated from the crypto space.

According to the Venture Capitalist, for the crypto space to attract real institutional capital, it needs to transform into a rule-based environment where regulators somewhat control digital assets. 

Last week, 29-year-old Tornado Cash Developer, Alexey Pertsev, was arrested by the Dutch Financial Crime Authority, following allegations that he was involved in money laundering via the protocol. 

This arrest was after the U.S. Treasury placed sanctions on the protocol following claims that Tornado Cash was increasingly used for money laundering activities. Moreover, according to the Dutch regulatory body, over $7 billion has been transacted on the protocol.

O’Leary went on to air his views, stating that, while institution interest in digital assets is increasing, most institutions are unwilling to touch crypto assets while crypto cowboys are running wild. According to O’Leary, getting rid of such individuals will stabilize the crypto space for institutional capital to flow into the space. 

However, he still believes that the crypto space is slowly evolving and weeding out such protocols and individuals. 

“I think we’re getting to that stage now. Maybe we’re in the third or fourth inning towards that, but I’m tired of this crypto cowboy crap. I want to get involved in a regulated place where we can bring billions of dollars to work. I don’t need to be a crypto cowboy, and I don’t want to be one because I work in the regulated world.” O’Leary added.

Crypto community backlash sparked by O’Leary’s views on Tornado Cash

illustrations of no entry signs

The U.S. Treasury sanctions and O’Leary’s statements enraged many influential crypto figures who did not shy off from defending the need for privacy in a decentralized network.

Patrick Collins – ChainLink Lead Developer Advocate

According to Patrick Collins, removing Tornado Cash’s GitHub account was much worse than sanctioning a website. Code is speech, and by removing the account, the U.S. Treasury is directly violating the first amendment of the U.S. Constitution regarding freedom of speech. 

Anthony Sassano – Ethereum Educator

Anthony Sassano also disclosed through a Tweet that he was temporarily banned from DeFi lending protocol Aave, following his address being blacklisted for receiving 0.1 ETH from an anonymous Tornado Cash user

According to Sassano, “The main conclusion I have come to from recent events is that Ethereum is more of a concern to governments/nation-states than Bitcoin.”