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Kraken, a United States-based cryptocurrency exchange, has announced its intention to share the data of approximately 42,000 users with the U.S. Internal Revenue Service (IRS) in compliance with a court order. The data transfer is scheduled to take place in early November.
Kraken revealed on its support page that the IRS had issued a summons to produce a wide array of records and data related to its U.S. clients. This action was taken based on a court order from the U.S. District Court for the Northern District of California in May 2021. Kraken initially contested the IRS’s requests and engaged in a legal battle to reduce the number of affected clients and the volume of data demanded.
The court has instructed Kraken to provide profile and transaction data for clients who conducted transactions exceeding $20,000 during any single year from 2016 to 2020. This includes individuals who may not have conducted transactions but made deposits and withdrawals.
The data to be shared with the IRS encompasses details such as names, dates of birth, tax identification numbers, addresses, contact information, and transaction history of the affected customers. It is estimated that data from around 42,000 accounts will be transmitted to the IRS.
This move by Kraken comes in the midst of a review by the U.S. Court of Appeals for the First Circuit concerning another case in which the IRS had sought user data from Coinbase. In 2018, Coinbase informed 13,000 affected customers that it would provide the IRS with their taxpayer identification numbers, names, birthdates, addresses, and historical transaction records spanning from 2013 to 2015.
James Harper, one of the affected users, lodged an appeal against the IRS to prevent the U.S. government from gaining unrestricted access to a user’s transaction history. In October 2023, the DeFi Education Fund, a cryptocurrency advocacy group, submitted an amicus brief in support of Harper’s appeal.
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