Kraken, a cryptocurrency exchange, has announced that it will comply with a June court order by providing the Internal Revenue Service (IRS) with data on tens of thousands of its users.
In particular, the company will divulge data on cryptocurrency transactions that Kraken customers made between 2016 and 2020 that valued more than $20,000. Users with addresses in the United States who made these sorts of transactions will have their account history, name, date of birth, Tax ID, address, and contact details forwarded to the IRS.
The company stated last week that emails were sent to every Kraken customer who was impacted by the announcement. A representative for Kraken also verified the development with Decrypt. The firm intends to share the user data in early November.
After two years of litigation over data sharing between the federal government and the privacy-minded cryptocurrency company Kraken, a federal judge in June ordered Kraken to provide such information to the IRS. 42,017 Kraken accounts are expected to be impacted by the decision, according to court documents in that case.
Even though Kraken has adamantly refused to give the IRS the information it is now obligated to provide, the company is portraying the situation as a win for privacy advocates and its legal battle with the IRS as having ultimately stopped a larger breach of users' personal data.
“We objected to the IRS’s demands and fought the summons, because it sought intrusive and unnecessary information about U.S. clients, including IP addresses, employment information, sources of wealth, net worth, and banking details,” a Kraken spokesperson said in a statement shared with a local media outlet. “We convinced the court to reject these demands. Kraken will always stand up for the privacy of its clients as it did here.”
The exchange is not the first cryptocurrency firm to be compelled to abide by the IRS's requirements. In 2018, a federal judge ordered the American cryptocurrency exchange Coinbase to hand over certain user data to the tax collection agency.
Another federal court in 2020 granted the IRS legal authority to search the records of cryptocurrency payments company Circle for data related to similar transactions of $20,000 or more made between 2016 and 2020. In addition, the agency secured a court order last year to acquire the same information from crypto prime brokerage SFOX.
