Kraken Seeks San Francisco Court Intervention Against IRS Demands

The U.S. Securities and Exchange Commission (SEC) accused Kraken and Coinbase of violating securities law with their staking services. While Coinbase settled with the SEC for $30 million, Kraken has opted to fight the battle in court against the IRS.

Cointelegraph reported that cryptocurrency exchange Kraken has filed a request in a federal court in San Francisco to intervene in the United States Internal Revenue Service's (IRS) demand for user information, which it believes is an "unjustified treasure hunt." The request follows the IRS's summons in February seeking additional user data to identify Kraken accounts that traded at least $20,000 of cryptocurrency in any single year between 2016 and 2020.

Kraken cited Coinbase's case in 2017, where the agency reduced its initial demand after the exchange refused. However, the summons sent to more than 14,000 customers was not deemed too intrusive by U.S. District Judge Jacqueline Scott Corley, who stated that the IRS had a valid reason to investigate taxpayers who might not be disclosing their cryptocurrency gains.

Kraken's lawyers argued that the IRS had gone "far beyond" its summons and that its demand for customer information was unjustified. Kraken has joined Coinbase in resisting the increasing regulatory scrutiny from American regulators, as Coinbase also faces a legal battle with the U.S. Securities and Exchange Commission over offering crypto staking services.

Resources:

Cointelegraph

Bloomberg