Key Takeaways
- Kraken is set to comply with a court order to share reduced but significant data of around 42,000 users with the IRS.
- The court's decision specifies data sharing for clients who made more than $20,000 in transactions between 2016 and 2020 or made only deposits and withdrawals.
- The Kraken case adds to a growing trend of IRS scrutiny against crypto exchanges, with Coinbase also being affected.
Adhering to a court directive, cryptocurrency exchange Kraken will release the data of approximately 42,000 users to the US Internal Revenue Service (IRS) by early November.
Kraken recently disclosed on its customer support page that it has been instructed by the US District Court for the Northern District of California to supply the IRS with certain user data.
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Initially, the IRS had sought a wide array of customer records, but Kraken resisted the initial summons. Subsequent legal proceedings led to a reduction in both the scope and the number of clients whose information would be shared.
The court's final decision mandates that Kraken submit both profile and transaction data for users who either transacted over $20,000 in a single year between 2016 and 2020 or simply made deposits and withdrawals without initiating any transactions.
The data to be handed over includes names, birth dates, tax identification numbers, addresses, and transaction histories. It's estimated that the records of about 42,000 accounts will be involved in this data sharing.
This is not the first case concerning the IRS and crypto exchanges. The US Court of Appeals for the First Circuit examines another case where Coinbase was required to disclose similar user information. In 2018, Coinbase alerted around 13,000 affected users that their names, tax IDs, addresses, and historical transaction details would be shared with the IRS.
The impending data release from Kraken marks another chapter in the ongoing struggle between cryptocurrency exchanges and US regulatory agencies over user data. As legal battles persist and advocacy groups like the DeFi Education Fund join the fray, the crypto community waits to see how these developments will shape data privacy laws within the industry.
