Kraken, a cryptocurrency exchange situated in San Francisco, is in the middle of a court battle with the Internal Revenue Service (IRS) over the latter’s demand for customer data.
The Internal Revenue Service is to look into whether Kraken clients who made crypto trades between 2016 and 2020 owe any taxes as a result.
Even though the Northern District Court of California has ordered Kraken to release some information, the exchange still appears intent on keeping its customers’ personal details safe and private. The cryptocurrency trading platform claims that the IRS’s requests are excessive and highlights the significance of user privacy and security.
Due to Kraken’s failure to cooperate with the IRS summons, the two entities are now engaged in a legal struggle. The IRS is looking for anybody who traded more than $20,000 in cryptocurrencies in a single calendar year to see whether they underreported their income taxes.
However, the exchange is worried that the IRS may disclose its customer’s personal information, leaving them vulnerable to identity theft and other damage.
“We fought the IRS because they sought intrusive and unnecessary information about U.S. clients,” a Kraken representative said. Kraken protected its customers from identity theft and other damage that may have resulted from the IRS leaking this information.
Kraken has been ordered by a U.S. district court to provide customer account and transaction details to the Internal Revenue Service. Some of the IRS’s larger requests, such as for more private information like job and financial records, have been refused by the court.
To identify and accurately assess the federal income tax liabilities of U.S. citizens who performed transactions in cryptocurrencies throughout the period 2016-2020, the government has a legitimate purpose in collecting the information listed in the summons, as stated in the ruling issued by Judge Joseph C. Spero.
Kraken has thanked the court for rejecting these requests, reiterating its commitment to customer safety and privacy. The marketplace affirms its commitment to always defend its customers and prevent unwanted interference.
It’s consistent with the overall trend of growing scrutiny of the crypto business by U.S. regulatory bodies that the IRS is investigating Kraken and its customers.
The United States Securities and Exchange Commission (SEC) has taken similar steps against other big platforms including Coinbase and Binance.US. Influential people in the sector, such as Coinbase CEO Brian Armstrong, have considered moving their operations to more crypto-friendly countries like Singapore, Hong Kong, and the United Kingdom due to concerns about legislative impediments and a perceived anti-crypto attitude.
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