Kraken opposes the transfer of its customer data to the US Internal Revenue Service

The exchange’s representatives believe that the IRS has gone far beyond the limits set by the court in its requests

27.04.2023 - 08:20

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3 min

What’s new? Cryptocurrency exchange Kraken has asked a federal court in San Francisco to reject a request for the identification of its users filed by the US Internal Revenue Service (IRS). Representatives of the platform called the IRS demands an “unjustified treasure hunt.” Earlier, the agency said it had launched an investigation into users who may have understated their tax liabilities, Bloomberg reports.

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The Kraken exchange launched in the United States in 2011 and is one of the largest on the crypto market. As of April 27, the platform hosts 218 coins and 645 trading pairs, with a daily trading volume of $1,02 billion.

What else is known? In an enforcement motion filed in February, the IRS said it was seeking to identify Kraken accounts that made at least $20 000 worth of cryptocurrency transactions in any year between 2016 and 2020. However, Kraken believes that the agency has gone far beyond the limits set by US District Judge Jacqueline Scott Corley in a similar case against Coinbase about six years ago.

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“Rather than abide by Coinbase’s ground rules, the IRS doubles down, making even more expansive requests and relying on a thinner rationale,” Kraken notes in a court filing.

IRS officials sent Kraken a request for information back in 2021, but the exchange failed to provide the documents. In February 2023, the IRS petitioned the court for permission to examine the books and records of Kraken and its subsidiaries.

The petition was released on February 9, just minutes after Kraken reported a settlement with the Securities and Exchange Commission (SEC) over charges of offering unregistered securities. It resulted in the termination of staking services to Americans and the payment of a $30 million fine.

In late January, analyst Colin Wu, citing sources, reported that crypto exchange Huobi was handing over customer data to the PRC tax authorities.

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