A new court order forces crypto exchange Kraken to give the Internal Revenue Service (IRS) some of its users’ data to investigate potential tax violations.
In March 2021, the IRS filed a petition to identify Kraken accounts that engaged in crypto transactions worth at least $20,000 in any year from 2016 to 2020.
In a court of law order dated June 30, Judge Joseph C. Spero orders Kraken to provide the IRS with the names, dates of birth, taxpayer identification number, physical and email addresses, and phone numbers of the affected account holders.
Spero says the IRS has a legitimate reason to seek information on certain Kraken users, as the agency wants to crack down on tax fraud.
“The government has a legitimate goal to seek the materials described in the subpoena. As discussed above, the subpoena was issued in connection with an investigation by the IRS to determine the identity and proper federal income tax liability of U.S. individuals who transacted in cryptocurrency during 2016-2020.
Spero says the number of taxpayers filing tax returns for Bitcoin-related investments between 2016 and 2020 will dwarf the volume of trading activity on Kraken.
He also agrees with the tax authorities “under-reporting of earnings is significantly higher when there is no third-party information reporting, as in the case of Kraken.”
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