Crypto Exchange Kraken to Share User Information with IRS
Crypto exchange Kraken has announced that it will be sharing select user information with the Internal Revenue Service (IRS) next month. This action is in response to a court order received by Kraken in June, which mandates the exchange to comply with the IRS’s request.
The battle between the IRS and Kraken began in May 2021 when a federal court authorized the tax agency to serve a John Doe summons on the crypto exchange. The purpose of this summons was to catch tax evaders. However, Kraken initially failed to comply with the summons, leading the IRS to file a court document seeking enforcement.
Details of User Information
According to the court order, Kraken is required to provide profile information and transaction histories for clients who conducted transactions exceeding $20,000 in any single year between 2016 and 2020. This includes names, birthdates, taxpayer identification numbers, addresses, phone numbers, email addresses, and transaction histories for those five years.
Kraken successfully convinced the court to reduce the number of affected clients and the amount of client data it must produce. The reduced number is now 42,017 users, down from the initial request of 59,331 users made by the IRS.
Similar Cases Involving Other Crypto Firms
Kraken is not alone in sharing user information with the IRS. In 2018, its rival Coinbase shared details of approximately 13,000 users with the tax agency. Additionally, in 2021, similar summons were issued to other crypto firms such as Poloniex and Circle.
Hot Take: Privacy Concerns Surrounding Crypto Exchanges
The disclosure of user information by crypto exchanges to government agencies raises concerns about privacy within the crypto industry. While tax evasion is a legitimate concern, users may feel uneasy about their personal and financial data being shared with authorities. Striking a balance between regulatory compliance and protecting user privacy will continue to be a challenge for crypto exchanges as they navigate the evolving landscape of government scrutiny.
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