Kraken, a U.S.-based cryptocurrency exchange, has announced its intention to share the data of approximately 42,000 users with the Internal Revenue Service (IRS) in compliance with a court order. The transfer of this information is slated for early November.
The company revealed on its support page that the data-sharing initiative stemmed from a subpoena requesting "extensive records and data" about its U.S. clients and its subsequent transmission to the IRS. The subpoena was originally issued as a court order in May 2021 by the U.S. District Court for the Northern District of California. Kraken initially resisted the IRS's request, engaging in a legal battle to contest the subpoena, which ultimately led to a significant reduction in the number of affected customers and the volume of customer data being disclosed.
Under the court order, Kraken is required to furnish the profiles and transaction data of customers who engaged in trading exceeding $20,000 in any given year from 2016 to 2020. This includes customers who may not have executed any transactions beyond deposits and withdrawals during that period.
The data shared with the IRS will encompass a range of information, including names, dates of birth, tax identification numbers, addresses, contact details, and transaction history of the affected customers. Reports suggest that this action will affect approximately 42,000 user accounts.
Another case related to the IRS's demand for user data is being reviewed by the U.S. Court of Appeals for the First Circuit, focusing on cryptocurrency exchange Coinbase. In 2018, Coinbase notified about 13,000 affected customers of its decision to supply taxpayer IDs, names, dates of birth, addresses, and historical transaction records from 2013 to 2015 to the IRS. One of the affected users, James Harper, has been vocal in urging the IRS to limit unrestricted access to user transaction histories. In October 2023, the DeFi Education Fund, a cryptocurrency advocacy group, filed an amicus brief in support of Harper's appeal.
