Kraken Ordered to Hand Over User Information to IRS

crypto exchange Kraken must provide a wide variety of information about its users to the Internal Revenue Service (IRS), according to a ruling in theU.S. District Court of Northern California yesterday. 

According to a Friday court filing, the company will need to produce full documentation for any Kraken user that bought, sold, or traded at least $20,000 worth of cryptocurrency between 2016 and 2020. Full documentation includes name, taxpayer identification number, physical address, phone number, email addresses, and transactional ledger. 

Even so, magistrate Judge Joseph Spiro denied a number of separate petitions by the IRS, which included requests for information on money laundering activities, clients’ net worth, and their source of wealth, among others.

Karen Cincotta, the IRS agent leading the case, has stated the platform accounts for over 4 million users, and has processed $140 billion since its opening in 2011. According to Cincotta, however, only 288,330 clients have filed official tax returns, a number “dwarfed by the number of trading activity that occurs on Kraken.”

Payward Ventures Inc, which operates Kraken, one of the world’s third largest exchanges according to Coingecko, has been battling the governmental agency for some time. Last April, a judge pushed back against demands from the IRS to review Kraken’s records, although a higher court gave the IRS a green light to proceed with its inquiry.

The company has repeatedly denied the IRS’s previous requests for information as well as other summons put forth by the agency. It did, however, publish a crypto tax guide in April.

Yesterday’s resolution comes amid a widespread regulatory crackdown on a number of cryptocurrency platforms. The U.S. Securities and Exchange Commission (SEC) has taken Coinbase–amply named in Kraken’s investigation–to the court for alleged unregistered securities offering, as well as Binance’s U.S. branch. 

Kraken has been in constant swings with regulators over the past months. The SEC delivered a $30 million fine ordering it to stop its staking service earlier this year, and the company has been trying to gain access to the Federal Reserve payment system to no avail.