Is the IRS in the midst of an ‘unjustified treasure hunt’ as claimed by…
- Crypto exchange Kraken is seeking a San Francisco court’s help to deal with demands made by the Internal Revenue Service.
- The exchange described the IRS’ demand for additional customer info as an “unjustified treasure hunt”.
Crypto exchange Kraken recently took a stand against the United States Internal Revenue Service (IRS). This was to object to the demands that the exchange present customer information to the court.
Kraken has sought the help of a federal court in San Francisco to fend off the demand for information from the agency.
Unjustified treasure hunt by the IRS
According to a report by Bloomberg, Kraken described the IRS’ demands as an “unjustified treasure hunt”. The IRS issued summons in February that required Kraken to provide some user information. This would identify accounts that conducted at least $20,000 worth of cryptocurrency trading in any single year between 2016 and 2020.
In response, Kraken cited a case from 2017 involving fellow crypto exchange Coinbase. Furthermore, it highlighted that the IRS breached the rules set by US District Judge Jacqueline Scott Corley. In the Coinbase case, the agency scaled back its initial demand after the crypto exchange held its ground and refused to comply.
However, Judge Corley ruled that the summons sent to Kraken were not overly intrusive. Additionally, the IRS had a legitimate interest in investigating taxpayers who might not be disclosing their Bitcoin gains, or underreporting their tax liability.
“Rather than abide by Coinbase’s ground rules, the IRS doubles down, making even more expansive requests and relying on a thinner rationale,” the court filing read.
Kraken’s lawyers further argued that the tax agency had gone “far beyond” its intrusive summons. Additionally, they stated its demands for additional information were unjustified. Judge Corley has set a date for next month to hear arguments in the case.
Speaking at the recently held Consensus Festival, Kraken’s Managing Director North America Guy Hirsch noted that the crypto industry would benefit from regulations stemming from the turmoil in 2022. He emphasized the need to restore investors’ confidence in the industry by creating an environment where customers can trust the crypto businesses that they engage with.