Kraken to Comply with IRS Directive, Sharing User Data in November

Kraken, a prominent cryptocurrency exchange headquartered in the United States, recently announced its intention to comply with a court order that requires it to share user data with the U.S. Internal Revenue Service (IRS). This compliance is scheduled to begin in early November.

The company detailed the situation on its support page, explaining that the U.S. District Court for the Northern District of California issued a court order in May 2021. This order mandated that Kraken provide extensive records and data related to its U.S. customers to the IRS.

Initially, Kraken resisted the IRS's demands and chose to challenge the summons in court. During this legal process, the cryptocurrency exchange managed to negotiate a reduction in both the number of affected clients and the extent of client data required.

As a result, Kraken is now obligated to submit profile and transaction data of clients whose transactions exceeded $20,000 in any single year from 2016 through 2020. This also includes clients who may not have engaged in transactions but made deposits or withdrawals.

The data to be shared includes personal identifiers such as names, dates of birth, tax IDs, addresses, contact details, and comprehensive transaction histories. It is estimated that approximately 42,000 accounts will be affected by this directive.

In a parallel development, the U.S. Court of Appeals for the First Circuit is currently considering a similar case involving Coinbase, another major player in the cryptocurrency exchange industry. In 2018, Coinbase had informed around 13,000 of its users that it would comply with an IRS demand for their personal and transaction data spanning from 2013 to 2015.

This move triggered a legal challenge from James Harper, one of the affected users, who sought to prevent the U.S. government from gaining unrestricted access to user transaction histories. In support of Harper's case, the DeFi Education Fund, a cryptocurrency advocacy group, submitted an amicus brief in October 2023.

TokenPost | [email protected]