American tax authorities want a cryptocurrency exchange to cough up data about its US users, and the company is refusing to comply.
The Internal Revenue Service (IRS) has submitted a legal request to demand data from the Kraken cryptocurrency exchange and its affiliate entities.
On Thursday, the IRS presented its court application just as Kraken said it would resolve irregularities with the Securities and Exchange Commission (SEC) about allegations that it provided securities without proper registration.
“Despite discussions between the parties, Payward Ventures Inc. [one of the registered companies that make up Kraken] & Subsidiaries has failed to comply with the summons and has not produced the books, records, papers and other data demanded in the summons,” wrote the IRS.
“Payward Ventures Inc. & Subsidiaries’ failure to comply with the summons continues to this date.”
The IRS further said it’s investigating US citizens who made cryptocurrency transactions to determine potential income tax liability.
This week, Kraken agreed to pay a $30 million fine to the SEC as part of a settlement.
Kraken has cited that it values the privacy and security of its clients above all else and will be addressing the concerns in court.
“One of Kraken’s guiding principles is maintaining the security and privacy of its client accounts. We understand that the Court has expressed concern over the scope of the Summons,” a company spokesperson told CoinDesk.
“The posture of this case has not previously given Kraken an opportunity to weigh in. We look forward to addressing our concerns to the Court.”
Pressure is mounting on the cryptocurrency community at a time of poor market performance and controversy including investigations into the controversial cryptocurrency trading platform FTX.
In 2020, the Canadian Revenue Agency (CRA) applied to the federal court to compel crypto exchange Coinsquare to share traders’ account history and data. Subsequently, Coinsquare and the CRA came to an agreement that allowed Coinsquare to protect 90-95% of its client’s data.
