Kraken joins Coinbase in an attempt to fight against US regulators.
Kraken, a United States-based cryptocurrency exchange, is challenging the United States Internal Revenue Service (IRS) demand for sensitive user information, describing it as an "unjustified treasure hunt" and seeking court intervention.
According to the Bloomberg report shared on April 26th, the San Francisco-based crypto exchange has asked a federal court to step in and tell the IRS to abandon its demands.
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The move comes in response to the IRS's February summons, which requested more user information to identify Kraken accounts with at least $20,000 in cryptocurrency trading in any year between 2016 and 2020.
Kraken's request to court points to a similar case involving Coinbase in 2017, stating that the IRS has gone far beyond the rules set by US District Judge Jacqueline Scott Corley.
In the Coinbase case, the tax agency reduced its initial demand after the crypto exchange's continuous refusal. However, Judge Corley determined that the summons sent to over 14,000 Coinbase customers was not excessively invasive, as the IRS had a legitimate reason to investigate taxpayers potentially not disclosing their Bitcoin (BTC) profits.
Kraken's legal team argues that the IRS's demands for customer data surpass the extent of its intrusive summons and lack justification.
The crypto exchange is seemingly joining forces with Coinbase in resisting increased regulatory scrutiny by US regulators. Coinbase is currently engaged in a battle with the US Securities and Exchange Commission (SEC) over its crypto-staking services.
The SEC claims that staking services offered by Kraken and Coinbase breach securities law. However, while Coinbase is fighting against these claims, Kraken has already settled with the SEC for $30 million.
Kraken's legal battle against the IRS emphasizes the importance of striking a balance between government oversight and preserving the privacy rights of cryptocurrency users. As the industry evolves, finding this equilibrium will be critical to fostering innovation and maintaining trust
