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Kraken Challenges US Authorities’ Cryptocurrency Oversight, Following Coinbase

2 mins
Updated by Kyle Baird
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In Brief

  • Kraken is challenging an investigation by the IRS, as revealed in a court filing.
  • The IRS wishes to know if there are users who are underreporting their tax liabilities.
  • Coinbase faced a similar probe in 2017, losing its bid to block the probe.
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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.

Brian Armstrong and Associates Standing in Front of US SEC | Twitter
Coinbase CEO Brian Armstrong (right) and Associates Standing in Front of US SEC | Twitter

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.

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content.

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Rahul Nambiampurath
Rahul Nambiampurath's cryptocurrency journey first began in 2014 when he stumbled upon Satoshi's Bitcoin whitepaper. With a bachelor's degree in Commerce and an MBA in Finance...
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