Kraken ordered by court to disclose user data to IRS for tax compliance

A federal court ordered crypto exchange Kraken to hand over account and transaction information to the Internal Revenue Service (IRS), which said it needed that information to see if any users of the exchange underreported their taxes. Is.

in order to do Issued On Friday, June 30, Kraken is required to provide details of users who have engaged in transactions of more than $20,000 within a calendar year, including their names (real or pseudonymous), dates of birth, taxpayer identification numbers, addresses , phone numbers, email addresses and many more. document.

In February, the IRS filed a petition in a court in the Northern District of California, shortly after Kraken settled with the United States Securities Exchange Commission (SEC) on claims of securities law violations related to its staking service. The IRS claimed it issued a summons to Kraken in 2021, which the exchange failed to comply with, and now wants to investigate the potential tax liabilities of users who conducted crypto transactions between 2016 and 2020.

Additionally, Kraken will be required to issue blockchain addresses and transaction hashes, which are already included in the transaction data available for sharing. Exchanges may also be asked to provide raw data to the IRS.

Judge Joseph Spero, who presides over the case, appears to have rejected the IRS effort. Received Employment information and funding source from Kraken. The judge rejected several of the IRS requests outright.

In the judge’s assessment of certain IRS requests, he said the court needs to determine whether the government’s subpoena is appropriately focused, meaning that it should not exceed more than is necessary to accomplish its intended purpose. .

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According to the Court’s findings, the information sought in the first three requests, intended to identify Kraken account holders who fall within the DoE definition, is overly broad and exceeds the information necessary for most Doe users to establish their identities .

Friday’s decision in favor of the government comes amid a deepening US crackdown on cryptocurrencies. The Securities and Exchange Commission filed separate lawsuits this month accusing Coinbase of running an illegal exchange and alleged that Binance.US mishandled customer funds, misled investors and regulators, and broke securities rules.

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