Circle CEO Jeremy Allaire Criticizes Sanctioning of Tornado Cash

The stablecoin issuer Circle quickly adapted to the decision of the U.S. Department of the Treasury to sanction Tornado Cash, but the company’s CEO is calling on industry leaders to establish a political framework that enables privacy.

Co-founder and CEO of Circle Jeremy Allaire joined the growing list of prominent crypto figures to voice his opinion on the matter, posting on Twitter to express his concern over the department’s move to sanction all Ethereum addresses associated with the popular cryptocurrency mixer.

The Treasury Department announced on Monday that it had banned Tornado Cash and its smart contracts. In a press release, the government agency described the protocol as a virtual currency mixer that launders proceeds from cybercrime. It was stated that $7 billion has been laundered through the protocol since its launch.

The Tornado Cash protocol is based on Ethereum and helps users preserve their privacy by obscuring transaction histories. Although it is a popular tool within the Ethereum community, hackers have used it multiple times, including by the North Korean state-sponsored cybercrime organization Lazarus, as it offers a way to obscure crypto assets with relative ease.

According to Allaire, the sanctions mark a critical point in the history of the internet and blockchain technology as the U.S. government targets a piece of open-source software rather than a specific entity. Allaire stated that this move raises ‘extraordinary questions about privacy and security on the internet.’

In a blog post on Tuesday, Allaire indicated that while Circle has an obligation to comply with the law, he believes that sanctioning the protocol is a ‘major political issue.’ He stated that Circle will call on leaders in the crypto industry, lawmakers, associations, developers, and regulators to develop a legal framework and policies that would protect user privacy while respecting principles of financial integrity, designed to thwart bad actors.

In response to the Treasury’s ban, Circle quickly complied with the decision and blacklisted the sanctioned addresses, freezing over $75,000 USDC in the process. Other entities such as Github, Infuria, and Alchemy have since followed suit.