Kraken has joined Coinbase in an effort to push back against the growing regulatory scrutiny by U.S. regulators.
Crypto exchange Kraken is taking the fight against the United States Internal Revenue Service (IRS) and its demand to present critical exchange user information to the court. The exchange deemed IRS’s demand for customer information as an “unjustified treasure hunt.”
The crypto exchange has requested a federal court in San Francisco to intervene in the issue and ask IRS to back off, reported Bloomberg. Kraken’s pushback against IRS comes in reaction to the agency’s February summons demanding additional user information to identify Kraken accounts that did at least $20,000 of cryptocurrency trading in any single year, between 2016 and 2020.
The exchange, in its request, cited Coinbase’s case from 2017 and said that the tax agency has gone far beyond the rules set by U.S. District Judge Jacqueline Scott Corley. In the Coinbase case, the agency scaled back its initial demand after Coinbase’s continuous refusal. However, Judge Corley decided that the summons sent to more than 14,000 customers of the exchange wasn’t too intrusive because the IRS had a valid reason to look into taxpayers who might not be disclosing their Bitcoin (BTC) gains.
The Kraken lawyers claimed that the IRS has gone “far beyond” its intrusive summons, and its demands for customer information are not justified. Kraken joined Coinbase in its efforts to push back against growing regulatory scrutiny by American regulators. Coinbase is currently fighting its own battle against the U.S. Securities and Exchange Commission over offering crypto staking services.
Related: First Republic Bank dives another 20% with Bitcoin ‘ready for $40K’
SEC alleged that staking services offered by the likes of Kraken and Coinbase violate securities law. While the San Francisco-based crypto exchange settled with the SEC for $30 million for offering staking services, it has decided to head to court for its IRS battle.
The growing regulatory scrutiny has become a growing concern for crypto companies in the U.S. The likes of Coinbase CEO Brian Armstong and USD Coin issuer Circle CEO Jeramy Allaire have warned that the growing pushback from the regulatory bodies will force budding crypto companies to move offshore.
Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?
