There is a need to restrict crypto apps that “disrupt the overriding forces of regulation,” says Shark Tank host and millionaire venture capitalist Kevin O’Leary, who argued that Tornado Cash and similar services prevent real capital institutional to enter the space.
In a discussion On Crypto Banter on Saturday, O’Leary, also known as Mr. Wonderful, suggested that apps like Tornado Cash, an Ethereum-based crypto mixer, are part of a “crypto cowboy” culture that shouldn’t have a place in the industry.
Instead, O’Leary opines that crypto needs a “rules-based environment” in order to attract real institutional capital into the digital asset industry, and much of that regulation must eradicate protocols like Tornado Cash, which allows users to transact anonymously and therefore potentially engage in criminal activity.
During the chat, O’Leary did not back down on his opinion regarding the arrest of Tornado Cash creator Alexey Pertsev, stating:
“At the end of the day, there’s nothing wrong with stopping this guy. Why? It plays with the overriding forces of regulation […] If we have to sacrifice it, that’s okay, because we want to have some stability in that institutional capital. »
The venture capitalist said that if institutional interest in the digital asset industry continues to grow, “they won’t touch it while the crypto cowboys ride the fence.” O’Leary pointed out that “until we get rid of this shit” there will be no “stability in […] institutional capital”, but he believes that the industry is slowly but surely eliminating the “cowboys”:
“I think we’re getting to that stage now. Maybe we’re in the third or fourth innings towards that, but I’m sick of this crypto cowboy bullshit. 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.
But O’Leary’s opinion runs counter to the sentiment of many in the space. The US government’s sanctioning of the Ethereum-based privacy tool last week has angered many influential crypto figures who have championed the need for basic privacy rights on decentralized networks.
Gnosis co-founder Stefan George was one of those who championed Tornado Cash, indicating that the protocol brings “much-needed privacy” to Ethereum and that writing open source software should be recognized as “an expression of freedom of expression.”
3/ The Tornado Cash team is incredibly talented and has brought much needed privacy to Ethereum. Hopefully everyone will again recognize that writing software is an expression of free speech and that technology is neutral.
— Stefan George (@StefanDGeorge) August 12, 2022
Lead attorney for Chainlink developers, Patrick Collins, also said that the decision to remove Tornado Cash’s GitHub account is “much worse than sanctioning a website” because the code is speech and in doing so the US Treasury violates the First Amendment to the US Constitution.
It’s MUCH worse.@TornadoCash Github accounts and the codebase have been completely removed.
This is much worse than just sanctioning a website.
Code is speech, so we’re potentially violating the First Amendment.
Paging Lawyers @adamdavidlong
—Patrick Collins (@PatrickAlphaC) August 8, 2022
Ethereum educator Anthony Sassano shared in a Tweet to his 218,000 followers that he was temporarily banned of the 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 greater concern to governments/nation states than Bitcoin.”
I think the main conclusion I have come to from recent events is that Ethereum is of more concern to governments/nation states than Bitcoin.
The implications of this will define the next few years for this industry.
— sassal.eth (@sassal0x) August 14, 2022
Related: Tornado Cash Co-Founder Reports Being Kicked From GitHub As Industry Responds To Sanctions
Last week, the Dutch financial crime authority, the Fiscal Information and Investigation Service (FIOD), arrested a 29-year-old Tornado Cash developer on suspicion of being involved in money laundering via the protocol.
According to a Dutch regulator, more than $7 billion has passed through Tornado Cash smart contracts since its inception in 2019. US Treasury sanctions came after new claims that the protocol had been increasingly used for money laundering activities.