The United States is tightening its grip on crypto regulation more than ever. Kraken fell earlier this month over a Securities and Exchange Commission (SEC) lawsuit. While Kraken agreed to cease offering staking to U.S. customers, the IRS now wants to review its paperwork. Will there be another settlement, or will Kraken have a hard time?
In early February, the SEC filed charges against Payward Ventures, Inc. and Payward Trading Ltd, aka Kraken. According to the SEC, Kraken had allegedly failed to register the offer and sale of its staking-as-a-service program. In this service, investors would receive an investment return of up to 21%.
Kraken decided to cease this offering almost immediately. Along with ending the staking offering, the SEC fined it $30M in restitution, late payment interest, and civil penalties.
In addition, Kraken consented to the entry of a final judgment subject to court approval. If approved, Kraken would be found guilty of violating Section 5 of the Securities Act of 1933. With this, Kraken would be barred entirely from offering and controlling staking services in the United States.
Many would have thought that with this, the Kraken drama would be over... but boy, oh boy, here we go again.
Hours after the SEC announcement, The U.S. Internal Revenue Service requested permission to enforce an information subpoena against Kraken.
According to the IRS, they issued the first summons in 2021, but the exchange did not comply then. In theory, the IRS is investigating the correct federal income tax liability of Kraken users from 2016 through 2020.
Many people claim this is a breach of confidentiality for Kraken customers. Only time will tell if Kraken will have to turn over the books and records.
