The Internal Revenue Service (IRS) previously launched an investigation aimed at identifying Kraken users underreporting their tax obligations. To do so, the agency filed a request in February to execute a subpoena with the exchange. She wanted data on Kraken accounts that had at least $20,000 worth of crypto transactions. These are transactions that took place in a single year between 2016 and 2020. That said, Kraken takes a dim view of the IRS action. Here’s why.
Kraken brings up a case concerning Coinbase to defend its positions
After the SEC’s repression deemed excessive against Kraken, the crypto exchange must face the IRS. In the new case, the crypto firm does not want to provide the IRS with data about its users. The exchange said the government agency collecting taxes in the United States had better stop its investigation. He explained that IRS requests are an invasion of privacy users.
Kraken pointed out that the US agency’s action is unwarranted. He therefore asked a federal court in San Francisco to intervene against her. For Kraken, the new case represents a “pointless treasure hunt», reported Bloomberg. The exchange believes that the real objective of the IRS is to extract more money from it than necessary.
To defend, Kraken referred to a comparable dispute that took place with Coinbase, about six years ago. At the time, US District Judge Jacqueline Scott Corley set a number of constraints. The crypto exchange today claims that the demands of the IRS exceed these.
Kraken clarified that the US agency failed to follow the guidelines of the Coinbase case. He feels that she has expanded and built her demands on a weaker base. It should be noted that in the Coinbase case, the agency ended up reducing its initial demands. However, the crypto company has not stopped opposing it.
In the case between Kraken and the IRS, Judge Corley indicated that the agency’s requests are not overly invasive. According to him, given the legitimate concern that the IRS has advanced, a subpoena concerning more than 14,000 users remains reasonable. Still, the judge has scheduled a hearing for next month. During this, he will evaluate the arguments presented in the context of the legal action that Kraken has launched. That said, some believe that this case is further proof that the US tax authorities are at war with cryptos.
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