Kraken Crypto Exchange to Share User Data with IRS Following Court Order

Kraken Crypto Exchange to Share User Data with IRS Following Court Order

Crypto News – Kraken, a prominent cryptocurrency exchange, is preparing to disclose specific user data to the Internal Revenue Service (IRS) next month, following a court order issued in June.

In an email sent to affected U.S. users on a Wednesday and viewed by The Block, Kraken stated that it anticipates sharing the information as mandated by the court’s order in early November 2023. The exchange confirmed the email and reiterated key points within it.

The legal clash between the IRS and Kraken began in May 2021 when a U.S. federal court granted the tax agency permission to issue a John Doe summons to Kraken and its subsidiaries, aiming to identify potential tax evaders. At that time, the IRS alleged that Kraken had not cooperated with the summons. Subsequently, in February of the following year, the IRS filed a court document requesting authorization to enforce the summons. In June, a federal court ruled in favor of the IRS, compelling Kraken to furnish user information.

Per the terms of the June order, Kraken is obligated to provide profile data and transaction records for clients engaged in transactions exceeding $20,000 within any single year between 2016 and 2020. This dataset encompasses individuals’ names, birthdates, taxpayer identification numbers, addresses, phone numbers, email addresses, and transaction histories during that five-year period.

The IRS initially sought more extensive information, including users’ IP addresses, employment particulars, sources of income, net worth, and banking information. However, Kraken noted in an email sent on Thursday that it successfully persuaded the court to substantially reduce the number of affected clients and the volume of client data that must be furnished.

The revised figure, according to the June court order, stands at 42,017 users, compared to the IRS’s initial request for information on 59,331 Kraken users.

Kraken is not the only cryptocurrency entity to share user data with the IRS. In 2018, its competitor Coinbase disclosed information for approximately 13,000 users to the federal tax agency. Furthermore, in 2021, the IRS issued similar summons to other cryptocurrency platforms, including Poloniex and Circle, the issuer of a stablecoin.