Kraken, a cryptocurrency exchange based in the United States, has announced its intention to share the data of 42,000 users with the U.S. Internal Revenue Service (IRS) in accordance with a court-issued order. This data transfer is scheduled for early November.
Kraken’s support page provides insight into the situation, explaining that the IRS’s request for “a broad array of records and data” pertaining to its U.S. clients, and its subsequent transfer to the IRS, stemmed from a court order issued by the U.S. District Court for the Northern District of California in May 2021. The company initially contested the IRS’s demands and engaged in legal proceedings to challenge the scope of the request, successfully reducing the number of affected clients and the volume of client data shared.
Per the court’s directive, Kraken is mandated to furnish profile and transaction data for clients who engaged in transactions exceeding $20,000 in any single year between 2016 and 2020. This requirement encompasses not only those who conducted transactions but also individuals who made deposits and withdrawals without actual transactions.
Kraken will provide the IRS with information including names, dates of birth, tax identification numbers, addresses, contact details, and transaction histories of the affected customers. This will affect approximately 42,000 accounts whose data will be transmitted to the IRS.
It’s worth noting that another case, involving the IRS’s demand for user data from Coinbase, is currently under review by the U.S. Court of Appeals for the First Circuit. In 2018, Coinbase informed its 13,000 impacted customers that it would be sharing their taxpayer identification numbers, names, birthdates, addresses, and historical transaction records from 2013 to 2015 with the IRS.
A user named James Harper has challenged the IRS’s request in an effort to safeguard a user’s transaction history from unrestricted access by the U.S. government. In October 2023, the DeFi Education Fund, a cryptocurrency advocacy group, submitted an amicus brief in support of Harper’s appeal.