- Kraken cites the Coinbase case against IRS’s unjustified demands.
- Coinbase fights with the Securities and Exchange Commission.
- American regulators continue to push against crypto companies, which could be a significant reason for crypto firms pulling out of the United States.
- Kraken settled with the Securities and Exchange Commission for $30 million to focus on a fight with the Internal Revenue Service.
Kraken has taken a stand alongside Coinbase to push back against the heavy regulatory scrutiny the United States regulators have imposed on the cryptocurrency industry.
The crypto exchange has taken its stance in the fight against the United States Internal Revenue Service and its demand to present critical exchange user information to the court.
Kraken is crying out at the injustice behind demanding customer information and pointing it out as a treasure hunt to find fault in the crypto space.
Kraken has requested the interference of a federal court in San Francisco on the issue and has demanded the IRS back off, according to reports from Bloomberg. The exchange’s pushback against the Internal Revenue Service comes after their reaction to the agency’s February summons, where there was a demand for additional user information to identify Kraken accounts that traded at least $20,000 worth of cryptocurrency in a single year between 2016-2022.
In Kraken’s request to the Federal Court, they cited Coinbase’s 2017 case and argued that the tax agency has gone beyond the rules set for them by U.S. District Judge Jacqueline Scott Corley. In Coinbase’s Case, the agency scaled back its initial demand after the exchange’s continuous refusal of the needs.
Judge Corley decided that the summons sent to more than 14,000 of Coinbase’s customers wasn’t too intrusive because the Internal Revenue Service had valid reasons for looking into taxpayers who have refused to disclose their Bitcoin gain.
Kraken’s lawyers claimed that the Internal Revenue Service has gone far beyond its duties by their intrusive summons and demand for customers’ information are unjustifiable. Hence their decision to join Coinbase in the efforts to push back against the growing scrutiny by regulators in the United States.
However, Coinbase is fighting its own battle against the United States Securities and Exchange Commission over its feature that offers crypto staking services.
The Securities and Exchange Commission accused Coinbase and Kraken of going against the Securities laws with their staking services. At the same time, Kraken chose to settle with the SEC for $30 million for their staking service, and the exchange decided to head to court in their battle against the IRS.
Conclusion
The growing regulatory scrutiny on the crypto sector has become a cause for concern for crypto companies in the United States. It has made the likes of Coinbase CEO Brian Armstrong and the USD Coin issuer, Circle CEO Jeremy Allaire, warn against the pushback from regulatory bodies as it could chase these companies out of the U.S.
Some crypto companies have already moved to crypto-friendly Hong Kong to exist in a healthy regulatory environment.
