• The Internal Revenue Service (IRS) has filed a court petition in the Northern District of California requiring Kraken, a cryptocurrency exchange, to turn over user account information and transaction history.
• This data is being sought to check if Kraken’s users have underreported their taxes.
• In response to the ruling, Kraken must provide extensive user data to the IRS.
Kraken Ordered to Turn Over User Data
Cryptocurrency exchange Kraken has been ordered by a federal court to turn over user account information and transaction history so that the Internal Revenue Service (IRS) can check if its users underreported their taxes. As a result, Kraken will be required to hand over swathes of user data for accounts which have conducted at least $20,000 worth of cryptocurrency trading between 2016 and 2020. The exchange had previously failed to comply with an IRS summons issued in 2021.
SEC Charges Against Kraken
The IRS court petition was filed shortly after Kraken announced it would settle charges brought against it by the United States Securities and Exchange Commission (SEC). The SEC had alleged that Kraken’s staking as a service program involved offering unregistered securities.
Court Order Details
The federal court order requires that Kraken provide taxpayer identification number, birth date, user name or pseudonym, phone number, email address, address, and other documents related to transaction hashes and blockchain addresses associated with its accounts. It also comes amidst increasing regulatory scrutiny towards crypto markets including lawsuits filed by the SEC against Binance and Coinbase for alleged mishandling of customer funds and illegal exchanges respectively.
Kraken’s Response
In response to this ruling, Kraken labelled the IRS summons an “unjustified treasure hunt” and argued that it went further than similar requests made towards Coinbase six years ago.
Conclusion
As regulatory authorities in America increase their crackdown on crypto markets, more exchanges like Kraken may soon face legal action from government agencies like the IRS or SEC seeking information on users’ transactions or holdings.