Cryptocurrency Exchange Kraken to Share User Information with IRS
Cryptocurrency exchange Kraken has announced that it will be sharing selected user information with the Internal Revenue Service (IRS) starting next month. The decision comes after the exchange received a court order in June, requiring them to do so. According to The Block, Kraken expects to comply with the court’s order and share the requested information in early November 2023.
The Battle Between the IRS and Kraken
The dispute between the IRS and Kraken began in May 2021 when a US federal court allowed the tax agency to serve a John Doe summons on the exchange and its subsidiaries. The IRS accused Kraken of non-compliance with a subpoena at the time. In February 2023, the IRS filed a petition seeking customer data from Kraken for users with more than $20,000 in trading volume between 2016 and 2020.
Kraken’s Lawsuit Against the IRS
In April, Kraken filed a lawsuit against the IRS, contesting their right to access user data. The company referred to the IRS demands as an “unjustified treasure hunt.” However, in July, the Federal Court ordered Kraken to hand over customer account and transaction information to the Inland Revenue. The IRS claims that this information is necessary to ensure tax compliance and prevent evasion.
Hot Take: Implications for Privacy in Cryptocurrency Trading
The case between Kraken and the IRS raises concerns about privacy in cryptocurrency trading. While regulators argue that access to user data is necessary for tax enforcement purposes, critics argue that it compromises individual privacy and may discourage participation in cryptocurrency markets. This case highlights the ongoing tension between regulatory oversight and privacy protection in the crypto space.
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