In a recent development, the United States District Court for the Northern District of California has issued an order demanding popular crypto exchange Kraken to hand over account and transaction information to the Internal Revenue Service (IRS).
The purpose behind this order is to investigate potential underreported taxes by some of the exchange’s users.
The court order, issued on June 30, requires Kraken to provide detailed information about users who conducted transactions exceeding $20,000 within a calendar year.
This information includes names (real or pseudonyms), birthdates, taxpayer identification numbers, addresses, phone numbers, email addresses, and other related documents.
The IRS had earlier filed a court petition in February, shortly after Kraken reached a settlement with the US Securities Exchange Commission (SEC) over alleged violations of securities laws linked to its staking service.
The agency revealed that it had previously issued a summons to Kraken in 2021, which the exchange failed to comply with, leading to the current investigation of users’ tax obligations for crypto transactions conducted between 2016 and 2020.
As part of the investigation, Kraken will also be required to provide blockchain addresses and transaction hashes, which are already included in the transaction data available for sharing. Additionally, the exchange may be asked to provide raw data to the IRS.
However, the court has dismissed some of the IRS’ requests, including the attempt to obtain employment information and source of wealth from Kraken users.
Judge Joseph Spero, presiding over the case, emphasized the need for the court to ensure that the government’s summons is appropriately focused and does not exceed what is necessary to achieve its intended purpose.
