Kraken, a cryptocurrency exchange headquartered in the United States, has announced its compliance with a court order to share the data of approximately 42,000 users with the U.S. Internal Revenue Service (IRS).
The exchange will transmit this information to the IRS in early November.
The court order, originating from the U.S. District Court for the Northern District of California in May 2021, compelled Kraken to provide a broad array of records and data concerning its U.S. clients to the IRS.
Initially, Kraken contested the IRS’s demands and engaged in a legal battle to reduce the scope of the summons. As a result, the number of affected clients and the volume of client data to be disclosed were substantially reduced.
Under the court’s directive, Kraken will furnish profile and transaction data for clients who engaged in transactions exceeding $20,000 in any single year from 2016 to 2020.
This also encompasses individuals who conducted deposits and withdrawals without actual transactions.
The data that Kraken will share with the IRS includes names, dates of birth, tax identification numbers, addresses, contact information, and transaction history for the affected customers.
It is estimated that around 42,000 accounts will have their information provided to the IRS.
READ MORE: Ripple Labs and XRP Community Rally Behind SEC Commissioner’s Call for Justice in LBRY Lawsuit
This development follows a similar case involving the IRS’s request for user data from Coinbase, another cryptocurrency exchange.
In 2018, Coinbase notified its 13,000 impacted customers that it would furnish the IRS with their taxpayer identification numbers, names, birthdates, addresses, and historical transaction records from 2013 to 2015.
A user named James Harper challenged the IRS’s request, seeking to prevent unrestricted access to a user’s transaction history by the U.S. government.
In October 2023, the DeFi Education Fund, a cryptocurrency advocacy group, submitted an amicus brief in support of Harper’s appeal, underscoring the broader implications of user data privacy in the context of cryptocurrency transactions.
In conclusion, Kraken’s decision to comply with the court order and share user data with the IRS reflects the ongoing scrutiny of cryptocurrency exchanges by tax authorities.
These cases raise important questions about user privacy and data protection in the rapidly evolving world of digital currencies.
Discover the Crypto Intelligence Blockchain Council
