Clamping down on cryptocurrency apps that “mess with the primary forces of regulation” is necessary, says Shark Tank host and millionaire venture capitalist Kevin O’Learywho argued that Tornado Cash and similar services are preventing real institutional capital from entering the space.
In a discussion on Crypto Banter on Saturday, O’Leary, aka Mr. Wonderful, suggested that apps like Ethereum-based crypto mixer Tornado Cash are part of a “crypto cowboy” culture that should have no place in the industry..
Instead, O’Leary believes that the crypto space needs a “rules-based environment” to attract true institutional capital to the digital assets sector, and much of that regulation needs to end protocols like Tornado Cash.which allows users to conduct anonymous transactions and thus potentially engage in criminal activity.
In the discussion, O’Leary did not back down from his opinion on the arrest of Tornado Cash creator Alexey Pertsev, stating:
“In the end, it’s fine to stop that guy. Why? He’s messing with the primal forces of regulation […] If we have to sacrifice it, that’s fine, because we want to have some stability in that institutional capital.”
The venture capitalist said that while institutional interest in the digital asset sector continues to rise, “they’re not going to touch it as long as the crypto cowboys are riding the fence.” O’Leary emphasized that “until we get rid of this crap,” there will be “no stability in […] institutional capital”, but believes the industry is slowly but surely weeding out the “cowboys”:
“I think we are getting to that phase. We may be in the third or fourth inning, but I’m tired of this cryptocurrency cowboy shit. I want to get involved in a regulated place where we can put billions of dollars to work. I don’t need to be a crypto cowboy, and I don’t want to be because I work in the regulated world.”
However, O’Leary’s opinion goes against the sentiment of many in the space. The US government’s sanction of the Ethereum-based privacy tool last week angered many influential figures in the crypto space who advocated the need for basic privacy rights in decentralized networks..
Gnosis co-founder Stefan George was among those defended by Tornado Cash, affirming that the protocol brings “much-needed privacy” to Ethereum and that writing open source software should be recognized as “an expression of free speech.”
3/ The Tornado Cash team is amazingly talented and brought much-needed privacy to Ethereum. Hopefully, everyone will recognize again, that writing software is an expression of free speech and tech is neutral.
— Stefan George (@StefanDGeorge) August 12, 2022
3/ The Tornado Cash team is incredibly talented and has brought some much-needed privacy to Ethereum. Let’s hope that everyone again recognizes that writing software is an expression of free speech and that technology is neutral.
Chainlink Core Developer Advocate, Patrick Collins, too said that the decision to remove Tornado Cash’s GitHub account is “far worse than sanctioning a website” as the code is a form of speech and by doing so the US Treasury is violating the first amendment of the United States Constitution.
It’s gotten MUCH worse.@TornadoCash Github accounts and codebase has been entirely removed.
This is much worse than just sanctioning a website.
Code is speech, so we are potentially violating the first amendment.
Paging lawyers @adamdavidlong
— Patrick Collins (@PatrickAlphaC) August 8, 2022
Things have gotten MUCH worse. The @TornadoCash Github accounts and code base have been completely removed. This is much worse than simply penalizing a website. The code is speech, so we are potentially violating the first amendment. Calling the lawyers @adamdavidlong
Ethereum educator Anthony Sassano shared in a tweet to his 218,000 followers that it was expelled Temporarily removed from decentralized finance (DeFi) lending protocol Aave after his address was blacklisted for receiving 0.1 Ether (ETH) from an anonymous person via Tornado Cash. Sassano went on to note that the “main conclusion I have come to from recent events is that Ethereum is of more concern to governments/nation states than bitcoin.”
I think the main conclusion I have come to from recent events is that Ethereum is more of a concern to governments/nation states than Bitcoin.
The implications of this will define the next few years of this industry.
— sassal.eth (@sassal0x) August 14, 2022
I think the main conclusion I’ve come to after recent events is that Ethereum is more of a concern to national governments/states than bitcoin. The implications of this will define the coming years of this industry.
In the past week, The Dutch financial crime authority, the Fiscal Information and Investigation Service (FIOD), arrested a 29-year-old developer of Tornado Cash, suspected of being involved in money laundering via the protocol.
According to a Dutch regulator, more than $7 billion has flowed through Tornado Cash smart contracts since their inception in 2019.. The US Treasury sanctions came after further claims that the protocol had been increasingly used for money laundering activities.
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