Cryptocurrency exchange Kraken is challenging a probe by the IRS relating to the tax reporting of its users. The IRS has increasingly focused on the crypto market over the past few years.
Cryptocurrency exchange Kraken is challenging authorities in the United States, with Bloomberg reporting that the exchange is pushing back against the Internal Revenue Service (IRS). The latter is conducting what Kraken considers an “unjustified treasure hunt.” The statement refers to an investigation currently being conducted by the IRS to determine whether there are users who are underreporting their tax payments.
Crypto Exchanges in the US on the Offensive
Kraken’s decision to narrow the scope of the investigation is a sign of crypto companies in the United States fighting back against what they consider to be unfair scrutiny. Kraken referred to another exchange fighting back against United States authorities in a court filing,
“Rather than abide by Coinbase’s ground rules, the IRS doubles down, making even more expansive requests and relying on a thinner rationale.”
The statement refers to another dispute the IRS had with Coinbase over six years ago. The statements and the pushback indicate that Kraken and other crypto companies are not going to let themselves be walked over.
It’s not that Kraken is completely against scrutiny. The exchange has stated that it was filing pre-registration paperwork with the Ontario Securities Commission in Canada in a bid to become a registered exchange.
Kraken Follows Coinbase in Fighting Back
Coinbase is another exchange that has proven to be tough when it comes to scrutiny. Currently, it is in a battle with the United States Securities and Exchange Commission (SEC). CEO Brian Armstrong has even urged Congress to prevent the SEC from interfering too much in the crypto industry.
Coinbase filed a petition against the SEC asking for more clarity, which is a sign of its intent to fight back. The move seeks to compel the SEC to respond yes or no to Coinbase’s pending rulemaking petition.
Coinbase Lost Bid to Block IRS Probe in 2017
About six years ago, the IRS was seeking information about accounts on Coinbase. In fact, the exchange lost its bid to block the probe. The agency ordered Coinbase to report over 14,000 users.
Moves like these by U.S. authorities have irked the crypto community, who think that it is an overreach. Moreover, taxation and KYC remain some of the biggest concerns for authorities in the United States. Therefore, it’s unlikely that these incidents will be the last of their kind.
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