United States-based cryptocurrency exchange Kraken to share user data with IRS
Kraken, a cryptocurrency exchange based in the United States, has announced that it will comply with a court order to share the data of 42,000 users with the U.S. Internal Revenue Service (IRS). The exchange will send the requested information to the IRS in early November.
Court order and Kraken’s objection
In May 2021, the U.S. District Court for the Northern District of California issued a court order demanding Kraken to provide a wide range of records and data on its U.S. clients to the IRS. Kraken initially objected to the IRS’s demands and contested the summons in court. As a result of their efforts, Kraken was able to significantly reduce the number of affected clients and the amount of client data required by the IRS.
Data shared with IRS
Kraken will be sharing various pieces of information with the IRS, including names, dates of birth, tax IDs, addresses, contact information, and transaction history of the affected customers. It is estimated that around 42,000 accounts will have their information sent to the IRS.
Similar case with Coinbase
The U.S. Court of Appeals for the First Circuit is currently reviewing another case where the IRS demanded user data from Coinbase, another cryptocurrency exchange. In 2018, Coinbase informed its 13,000 affected customers that it would provide their taxpayer IDs, names, birth dates, addresses, and historical transaction records to the IRS.
Support for user appeal
One user affected by the IRS’s data request from Coinbase, James Harper, appealed against it in order to prevent unrestricted access to his transaction history by the U.S. government. In October 2023, the DeFi Education Fund, a cryptocurrency advocacy group, filed an amicus brief in support of Harper’s appeal.
Hot Take: User privacy concerns in the crypto space
The sharing of user data by cryptocurrency exchanges with government authorities raises concerns about user privacy and the potential misuse of personal information. While compliance with court orders is necessary, it highlights the need for stronger privacy protections and regulations in the crypto industry to ensure the security and confidentiality of user data.
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