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Kraken Seeks San Francisco Court Interference On IRS Demands

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Crypto regulation in the United States is getting hotter against crypto companies and exchanges.

US regulators are recently mounting more tough demands and rules that seem too choky for exchanges operating in the jurisdiction.

Crypto exchange Kraken is pushing back against the recent demand from the United States Internal Revenue Service (IRS).

The exchange is seeking the interference of the federal court in San Francisco over the IRS’s latest rules on regulations.

The exchange stated that the regulator’s demand for additional user information is unjustifiable.

Kraken Challenges IRS’s Summons

According to Bloomberg’s report on April 26, the crypto exchange Kraken is asking for a San Francisco federal court to hold back the US IRS on its demand.

The regulator requested more information on users that have traded up to $20,000 in crypto through the exchange in a year.

According to IRS, the details will cover from 2016 to 2020 and are aimed at customers who underreport their normal tax.

The demand came during IRS February summons where the agency submitted a petition to enforce the summons.

However, Kraken is challenging the regulatory demand, stating that it amounts to unwarranted intrusion.

It said that IRS is seeking to extract more funds from the exchange unnecessarily.

READ ALSO: Binance CEO Changpeng Zhao Denies $28 Billion Wealth

More Details

Kraken cited that the agency’s demand exceeds the restrictions set by US District Judge Jacqueline Scott Corley during a similar dispute with Coinbase, six years ago.

The exchange noted that IRS cut down its demands in the previous case with Coinbase though the latter fought against it.

In its filing, Kraken highlighted an expansion of the request from the agency which it developed on a weaker foundation.

So, the agency is sidelining its previous guidelines related to its case with Coinbase.

COURT

On the other hand, Judge Corley stated that the IRS demand on over 14,000 Kraken users was not too invasive.

This is because the agency is legally obligated to investigate tax payments to fish out those that conceal their crypto profits.

However, Kraken lawyers maintained that the agency is going overboard on its summons for users’ information on the exchange.

For the legal representatives, the expanded invasive has no justification.

Kraken is one of the top crypto exchanges, ranked as the third largest exchange cap as per CoinMarketCap.

Founded in 2011, the exchange is headquartered in San Francisco and boasts a large customer base. Its 24-hour trading volume is over $900 million.

READ ALSO: Report Illegal Fund Manager Without Registration, SEC

Growing Concerns Over US Crypto Regulation

US regulators are tightening their regulatory measures on the crypto industry and exchanges.

The increasing enforcement actions are raising concerns in the impact on the performance of crypto within the country.

In February, the US Securities and Exchange Commission (SEC) penalized Kraken for offering staking services.

The exchange paid $30 million to the regulator and halted the services for US residents. But it is fighting the new demand from IRS.

Also, the SEC came after the Coinbase exchange on the same ground of staking crypto assets. However, Coinbase is fighting back through its petition that staking is not securities.

Recently, Jeramy Allaire, CEO of Circle USD Coin issuer, pointed out the increasing regulatory scrutiny from US regulators.

Allaire noted that the alternative currencies could displace the dollar’s dominance with more crypto firms leaving the US.

 

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