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- 1 A Federal Court has ordered the crypto exchange Kraken to release users’ information to the Internal Revenue Services.
- 2 The government agency previously summoned the exchange in 2021.
As ordered by a Federal Court, crypto exchange Kraken will have to provide an array of information about its users to the IRS. The United States District Court of North California ruled on July 1, 2023, that the crypto exchange must share its users’ information with the Internal Revenue Service. They are concerned about diminishing tax returns filed with the agency.
JUST IN: 🇺🇸 IRS orders Kraken #crypto exchange to turn over its users' information.
— Watcher.Guru (@WatcherGuru) June 30, 2023
Reveal & Share Users’ Information, Says Court to Kraken
The crypto exchange must now provide complete documentation of any user who purchased, sold, or traded digital assets over $20,000 between 2016 and 2020. The documentation shall include name, taxpayer identification number, phone number, physical address, transactional ledger, and e-mail address.
Multiple petitions are already filed against Kraken, but Magistrate Judge Spiro denies those petitions. They included requests for information on money laundering activities, clients’ wealth source and net worth, etc. They are instead ruled on providing other details.
The IRS agent leading the case, Karen Cicotta, argued that the platform has over 4 Million active users and registered overall processed transactions worth $140 Billion since its inception in 2011. He also pointed out that only 28,330 clients have filed official tax returns, a small percentage compared to the number of trading activities carried out on the platform.
Payward Ventures operates the world’s third-largest crypto exchange and has grappled with the governmental agency for some time. In April 2022, a judge denied the IRS request to scrutinize the exchange records. However, the higher court provided the green signal to the agency to carry on the inquiry.
The exchange has denied the IRS request for information on multiple occasions, along with the summons put forth by the agency. The crypto exchange published a crypto tax guide in April 2023.
Yesterday’s resolution by the California Federal Court adds to the massive list of regulatory crackdowns by the United States on the crypto industry. So much so that after the FTX filed for Chapter 11 bankruptcy in Delaware on November 11, 2022. There has been a 183% increase in the actions taken by the agency against the industry.
The financial watchdog sued the world’s biggest crypto exchange and Coinbase for two consecutive days in June 2023. These actions were not received well by the crypto community. Also, SEC chair Gary Gensler pointed out the interesting similarities between the world s biggest exchange might have certain similarities with FTX.
The now bankrupt crypto exchange FTX used its sister firm, Alameda Research, in the multi-million dollar fraud. Similarly, Gensler pointed out that the U.S. subsidiary of the biggest crypto exchange has merged its funds into an account controlled by Merit Peak Limited.
Kraken is not new to having feuds with the regulators, as earlier this year, the exchange was fined $30 Million along with the order to stop its staking service. The exchange has been trying to gain access to the Federal Reserve payment system for quite some time but hasn’t succeeded yet.
With the current ruling, the Internal Revenue Service is trying to determine if some exchange users have underreported their taxes to the government. The exchange failed to comply with the summons first issued in 2021, and because of this, the IRS now wants to investigate the users’ tax obligation.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
