Kraken Exchange to Share User Data with IRS

Kraken exchange has announced its compliance with a court order to share the data of approximately 42,000 users with the U.S. Internal Revenue Service (IRS). The exchange will transmit this information to the IRS in early November.

Kraken, on its support page, specified that the court order, issued by the U.S. District Court for the Northern District of California in May 2021, mandated the production of a “wide range of records and data” concerning its U.S. clients. Initially, the IRS demanded extensive data, but Kraken objected and successfully reduced the number of affected clients and the volume of data.

The court directed Kraken to provide profile and transaction data for clients who conducted transactions exceeding $20,000 in any single year between 2016 and 2020. This also includes users who made deposits and withdrawals without engaging in transactions.

Kraken will share various customer details, including names, dates of birth, tax IDs, addresses, contact information, and transaction history, for the affected accounts. The total number of accounts affected is estimated to be around 42,000.

Kraken Exchange Amongst Similar Cases in the Crypto Industry

This incident is not isolated, as the crypto industry faces increasing scrutiny from regulatory authorities. A comparable case involves the U.S. Court of Appeals for the First Circuit reviewing an IRS demand for user data from Coinbase, another prominent cryptocurrency exchange. In 2018, Coinbase informed its 13,000 affected customers that it would provide the IRS with taxpayer IDs, names, birth dates, addresses, and historical transaction records from 2013 to 2015.

Amidst these developments, individuals like James Harper are appealing against the IRS’s unrestricted access to users’ transaction history. Notably, the DeFi Education Fund, a cryptocurrency advocacy group, filed an amicus brief in October 2023, supporting Harper’s appeal against the government’s access to sensitive user data.