Kraken Crypto Exchange Will Submit User Data To IRS

The Kraken crypto exchange is ready to submit user data to the IRS. (Photo; Doc. Transitnet)

JAKARTA One of the leading crypto exchanges from the United States, will reportedly provide their user data to the US tax agency, Internal Revenue Service (IRS), next month.

Previously, Kraken had received a court order in June 2023. The data relates to Kraken users who made transactions above US$20,000 (Rp318 million) between 2016 and 2020.

Earlier, the legal feud between Kraken and IRS began in May 2021 when a federal court authorized the tax agency to issue a summons to Kraken. The goal is to identify potential tax evasion among exchange users. Kraken initially rejected this request.

After several trials in court, Kraken managed to convince the court to significantly reduce the scope of information they should provide, as well as the number of affected users.

According to a June court order, Kraken must provide user information such as name, date of birth, taxpayer ID, address, phone number, email address, and transaction history for users with transactions above 20,000 US dollars in one year between 2016 and 2020.

Previously, the IRS request included wider user data, including IP addresses, work information, wealth sources, net worth, and banking details. The court rejected IRS access to this information.

The number of Kraken users requested by the IRS has been reduced to 42,017, down from 59,331 users. Kraken notified affected users via email this week that it plans to share their data with the IRS in early November.

IRS Targets Crypto Companies

IRS has also targeted other major crypto companies such as Circle and Poloniex with John Doe's call to uncover potential tax evasion among their users.

A number of industry experts argue that this call injures user privacy and is too far into sensitive personal financial data coverage. Others argue that tax institutions have the right to request relevant transaction information to enforce tax compliance.

It's important to remember that if you're a crypto trader in the United States, the IRS may already know who you are and to what extent you are a trader. It's natural that IRS wants to check traders' data to see if users have paid revenue taxes from investing in crypto assets or not. Crypto taxes are a complex issue due to the lack of clear rules from the IRS, especially regarding various types of crypto activity, to be reported.