Crypto exchange Kraken has called the Internal Revenue Service’s (IRS) investigation into its users an “unjustified treasure hunt.”
According to a Wednesday report from Bloomberg, Kraken has asked a federal court in San Francisco to order the IRS to stand down.
“Rather than abide by Coinbase’s ground rules, the IRS doubles down, making even more expansive requests and relying on a thinner rationale,” said Kraken in a court filing on April 24.
Kraken’s request for the federal court’s intervention comes after the IRS submitted a petition to enforce a summons, seeking information on the crypto exchange’s users that transacted at least $20,000 in a financial year between 2016 and 2020.
The IRS was granted permission to serve the summons in May 2021, which the agency said would be relevant to their investigation into cryptocurrency users who may be failing to comply with their tax obligations.
However, in February, the IRS petitioned the court to enforce the summons, claiming that Kraken had not complied with the summons and had not produced the books, records, papers, and other data that the agency demanded.
In the filing on Friday, Kraken argued that the IRS’ demands exceeded the boundaries set by U.S. District Judge Jacqueline Scott Corley in a similar case six years ago. Kraken’s lawyers claimed that in this instance, the IRS “wants more — and for a much bigger universe of users.”
A hearing has been set for next month for the presiding judge to hear arguments on the case.
Earlier this year, Kraken paid a $30 million fine to the U.S. Securities and Exchange Commission (SEC) to settle a lawsuit regarding its cryptocurrency staking services. As a result of its compliance with the SEC’s order, Kraken accounted for the most staked ETH withdrawn since the Shanghai Upgrade went live on the mainnet.
— Velvet.Capital (@Velvet_Capital) April 23, 2023