Kraken Ordered to Turn Over Its Users’ Information to the IRS Cryptocurrency exchange must provide wide swath of user data Court order comes amid deepening digital currency crackdown Photographer: Tiffany Hagler-Geard/Bloomberg By Joel Rosenblatt June 30, 2023 at 3:59 PM CDTUpdated onJune 30, 2023 at 6:23 PM CDT Cryptocurrency exchange Kraken was ordered by a judge to provide a wide swath of information about its users to the Internal Revenue Service for the agency’s investigation of underreported tax liability. The IRS has said it wants information on Kraken accounts that did at least $20,000 of cryptocurrency trading in any single year, from 2016 to 2020. Kraken had called the agency’s summons an “unjustified treasure hunt,” arguing it went well beyond the boundaries set in a similar fight with Coinbase about six years ago. Friday’s ruling siding with the government comes amid a deepening US crackdown on cryptocurrency. The Securities and Exchange Commission this month filed separate lawsuits accusing Coinbase of running an illegal exchange and alleging that Binance.US mishandled customer funds, misled investors and regulators, and broke securities rules. Read More: SEC’s Coinbase Lawsuit Heralds Deepening US Crypto Crackdown The IRS didn’t win everything it was seeking from Payward Inc., the San Francisco-based company established in 2011 to operate Kraken, but US Magistrate Judge Joseph Spero directed the company to turn over users’ names, birth dates, taxpayer identification numbers, addresses, phone numbers, email addresses, some documents and transactional ledgers. The IRS “has a legitimate purpose for seeking the materials,” the judge wrote, namely to “determine the identity and correct federal income tax liability” for users in the designated time period. The agency’s demands are backed up by the fact that taxpayers filing returns with Bitcoin-related investments are “dwarfed by the amount of trading activity that occurs on Kraken,” Spero said. The exchange had 4 million clients conducting more than $140 billion in trades from 2011 to 2017, and was registering as many as 50,000 new users daily, according to the order. Kraken is a top crypto exchange with daily trading volume of roughly $650 million globally, according to CoinMarketCap. The company didn’t immediately respond to an emailed request for comment on the ruling. dispute between Coinbase and the agency, the IRS scaled back its initial request, but the company continued to resist. A judge ultimately ruled that a summons targeting more than 14,000 of the exchange’s users wasn’t overly intrusive because the IRS had a legitimate interest in investigating taxpayers who may not be reporting their Bitcoin gains. Read More: Crypto Exchange Kraken Blasts IRS Summons as ‘Treasure Hunt’ Spero said that while both the US and Kraken made arguments that bordered on mischaracterizing the Coinbase ruling, it is “clearly not the case,” as Kraken argued, that the earlier decision established a limit on the number of cryptocurrency accounts that can be targeted by the IRS. The judge rejected IRS demands for information in due diligence Kraken questionnaires, including users’ employment, net worth and source of wealth. He also declined to order Kraken to turn over information from anti-money laundering investigations. The case is United States of America v. Payward Ventures Inc., 23-mc-80029, US District Court, Northern District of California (San Francisco).
Every single crypto exchange should shut down operations for US residents Most crypto firms, not just the exchanges, are already not accepting US customers Crypto is technically "banned" in the US through a series of tactics dubbed Operation Chokepoint 2.0 Crypto in the US will exist through a walled-garden, AML-KYC, i.e. Blackrock, Fidelity and a few others This is a good thing for the future of Bitcoin and true crypto assets operating on decentralized blockchains for the rest of the world
I was able to open up accounts at Bybit and Binance with the help of a friend overseas. It's their account, technically. Binance used to also deny two regions of Canada too, Quebec and one other (not BC). Then they threw in the towel on the entirety of Canada as well. Bybit is currently excluding the US and those same two regions of Canada...also North Korea and Syria and the Russian annexed regions of formerly Ukraine. So they are examining IP addresses, as well ID papers. Bitget still offers a lot of service without any KYC if you deposit and withdraw with coin. Yah, i remember Coinbase started out just offering BTC and wouldn't mind if exchanges offered only BTC. I'm not convinced these other coins are better layer ones. I mean, take Litecoin for example. A Google engineer tweaked Satoshis code over a weekend just for fun, speeding up blocks by 4x. I mean, how much talent did that take? Likewise, so many people have ripped off Satoshis genius tweaking his code. Satoshi was not funded like these me too people, who put out "road maps", issuing coins, to basically fund a lifelong programming fantasy. Is anybody really creating anything as genius as Satoshi? I've lost a lot of respect for these YouTubers who have been promoting a diverse portfolio all these years, as if BTC is going to fail, lowering BTC's overall liquidity, and squelching it's upward mobility. But ok, maybe competition for the next store of value is a good thing. You should be able to take that risk someplace. Anyway, it looks like there will always be sophisticated exchanges, offshore, just out of reach of the over-reaching bully agencies of the US, which is one of the few countries trying to collect taxes on US "citizens" no matter where they are located in the world. The software to run one of these exchanges is already written, nearly perfected, and probably for sale. The servers this software lives on can be moved almost anywhere by tech saavy owners. They don't have to all run on AWS, or any such centralized farm. So long as there is a political jurisdiction that will host the owner-operators, there will probably always be the next Bitget, whenever a Binance or a Bybit is swallowed up. Now it's Kraken. Who is next? They would seriously like to do that to Binance if they could. It really is all about the choke points. I really want to see the over-reachers fail to choke absolutely everyone.
Calling any regulator a bully does not answer the fundamental question of Exchange integrity... why should consumer / trader/ investor take the risk of Exchange bankruptcy? can any Crypto enthusiast answer that? AN Exchange is supposed to novate the trade / facilitate the trade not play any other games.. is that not the purpose .. even in the extreme free capitalist society if the trading venue is not reliable then what good is it? a simple technical and fundamental question...
AML-KYC'ed bitcoins and cryptos are what many on ET have been waiting for No more exchange hacks, no more lost private keys, no more money laundering, no more tax evasion, no more drug trafficking, All the ET nocoiners-haters will happily download the -iBitcoin wallet from the app store, pay Apple 50-200 basis points a year for "support and upgrades", they will not be able to withdraw to local wallet against Apple policy The minute they are suspected of ".....", their iBitcoin wallet will be frozen and all crypto assets will be confiscated And they will be happy with this arrangement... because their SJW beliefs are met No more exchange hacks, no more lost private keys, no more money laundering, no more tax evasion, no more drug trafficking,