• The IRS is seeking court approval to examine Kraken’s books and papers in order to identify taxpayers who conducted crypto transactions.
• Kraken has settled SEC charges that it offered unregistered securities through its staking-as-a-service program, where it will pay $30 million.
• The IRS issued a summons in 2021 but Kraken has failed to comply.
IRS Seeks Court Approval to Identify Crypto Customers
The U.S. Internal Revenue Service (IRS) has filed a court petition seeking permission to enforce a summons for information against the Kraken crypto exchange and its subsidiaries. The IRS said it first issued a summons in 2021, but Kraken has failed to comply with the request.
Kraken Settles SEC Charges
Kraken announced that it would settle Securities and Exchange Commission charges that it offered unregistered securities through its staking-as-a-service program, where it will pay $30 million. According to the SEC, this violated federal securities laws as the staking service was being marketed as an investment opportunity without registering with regulators or providing required disclosures about fees, risks and other details of the offering.
Implications for Crypto Regulation
This move by the IRS and SEC demonstrate how seriously governments are taking cryptocurrency regulation and how they intend to enforce their laws on exchanges like Kraken which may have allowed customers to conduct transactions without properly reporting them for tax purposes. This could have implications on how exchanges operate in the future as well as how investors use them going forward.
Potential Impact on Investors
For investors who used Kraken’s services but did not report their gains properly, they may now be subject to additional scrutiny from regulators or face penalties if they cannot prove proper compliance with tax regulations related to their cryptocurrency holdings or activities conducted through the exchange platform.
Ultimately, this case is still ongoing and we need more clarity from both agencies before we know what the full implications of this action might be for investors using crypto exchanges like Kraken going forward.