Kraken fights back after IRS demands user information
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Cryptocurrency exchange Kraken challenges the Internal Revenue Service’s (IRS) requests for user data, claiming the demands represent an unwarranted intrusion and asking a federal court to intervene.
Recently the cryptocurrency exchange, Kraken, is contesting the IRS’s request for information about its users, claiming the agency’s demands represent an “unwarranted search for hidden treasures.” Kraken is hinting that the agency is just looking to squeeze more money from the exchange than what is needed.
Kraken has now asked a federal court in San Francisco to instruct the IRS to halt its investigation, which the agency says is aimed at users potentially underreporting their tax obligations.
In February, the IRS submitted a petition to enforce a summons, seeking data on Kraken accounts that conducted at least $20,000 worth of cryptocurrency transactions in any single year between 2016 and 2020.
Kraken, however, maintains that the IRS’s requests surpass the constraints set by U.S. District Judge Jacqueline Scott Corley in a comparable dispute with Coinbase around six years prior.
In a court document, Kraken contends that the IRS has expanded its requests and built them on a weaker foundation, rather than following the Coinbase case’s guidelines. In the Coinbase situation, the agency reduced its initial demands, but the company continued to oppose them.
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Judge Corley ultimately determined that a summons affecting more than 14,000 users was not overly invasive, given the IRS’s legitimate concern in investigating taxpayers who may be concealing their bitcoin profits.
According to Kraken’s legal representatives, the IRS is seeking more information and targeting a wider range of users in the Kraken case. Kraken, headquartered in San Francisco, ranks among the top crypto exchanges, boasting a daily global trading volume of around $650 million, as per CoinMarketCap data.
The largest withdrawer of #Etherum since the Shanghai upgrade has been Kraken (433k ETH), which had to to shut down it’s staking service due to settlement with the US SEC pic.twitter.com/w1rSlxNbDl
— Velvet.Capital (@Velvet_Capital) April 23, 2023
In February, Kraken settled allegations by the Securities and Exchange Commission (SEC) that the firm’s staking service was an unlawful sale of securities, agreeing to pay $30 million.
A hearing has been scheduled for next month by Judge Corley to assess the arguments presented in the Kraken lawsuit.
Read more: Bitcoin could hit $10m says Kraken CEO