The cryptocurrency exchange site Kraken was demanded by the IRS to provide user base information following the investigation of an unreported income tax liability. However, they didn’t get everything they wanted from Payward Inc., a San Francisco-based company.
Still, U.S. Magistrate Judge Joseph Spero ordered the company to turn over the confidential data of their users. Siding with the IRS and stating that they had a legitimate reason to seek private data for income tax liability.
Furthermore, they agreed with the evidence provided by the service since the filing returns of taxpayers on the website was more than the trading activity on the site. Kraken didn’t quickly respond to the emailed request for comment.
Additionally, the judge dismissed IRS’ demands to obtain confidential data of the user base’s employment, net worth and source of wealth. As well as information for anti-money laundering schemes. This case also led to the IRS’ having a limit on the amount of cryptocurrency accounts they can investigate.
This situation is reminiscent of Coinbase continuing to resist the IRS’ demands, despite the company lowering their request. Similarly, the judge also sided with the IRS’ reasoning for investigating taxpayers who weren’t reporting their bitcoin gains. Kraken argued that the IRS is simply doing an “treasure hunt” on their company, and Coinbase being poorly represented.
Cases like these showcase the ongoing crackdown of cryptocurrency accounts in the United States under anonymous identities. It won’t be easy given how long of a task it is due to how broad the digital landscape is, and the anonymity of people online.
Two separate lawsuits filed by the Securities and Exchange Commission (SEC), details Coinbase being accused for illegal exchanges, and Binance under the fire for mishandling customer funds, purposely misleading investors and regulators, as well as breaking several security rules.