Kraken was ordered to hand over Crypto client information to the IRS

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A federal judge has ordered cryptocurrency exchange Krakento to disclose customer information to the IRS.

The Internal Revenue Service had requested information to determine whether Krakens customers understated their income when filing taxes, according to a Friday, June 30 court ruling, which comes amid a broader government crackdown. against the crypto sector.

PYMNTS has reached out to Kraken for comment but has yet to hear back.

U.S. Magistrate Judge Joseph Spero ruled that Kraken must provide the IRS with information about customers who transacted more than $20,000 between 2016 and 2020. This information includes user names (and any pseudonyms), birth dates, tax identification numbers, addresses, telephone numbers. , e-mail addresses and a number of other documents.

The judge denied the IRS’ request for information from the Krakens Know-your-Customer (KYC) due diligence questionnaire, such as employment, net worth, and source of wealth, as well as records from anti-trust investigations. -money laundering, claiming they went beyond what is reasonably necessary to achieve the purpose of such requests.

The decision comes months after Kraken ended its cryptocurrency staking service for US customers as part of a settlement with the Securities and Exchange Commission (SEC). The settlement, which included $30 million in penalties and other costs, came after the SEC accused Kraken of failing to register the program’s offer and sale.

Whether through Staking-as-a-Service, loans or other means, crypto intermediaries, when offering investment contracts in exchange for investor tokens, must provide the information and appropriate safeguards required by our securities laws, said SEC Chairman Gary Gensler. time.

The court ruling comes as the Genslers agency steps up its focus on the crypto sector, filing a lawsuit last month against two of the industry’s biggest players.

Last month, the SEC filed 13 charges against Binance, the world’s largest crypto exchange, Binance, as well as founder Changpeng Zhao, alleging a series of securities law violations and claiming that the company was delivered to a vast network of deceptions.

Binance countered in a statement that the Commission decided to regulate with the blunt weapons of enforcement and litigation rather than the thoughtful and nuanced approach demanded by this dynamic and complex technology, the SEC’s actions undermine the role of the Americas as a global hub for financial innovation and leadership.

The next day, the regulator separately sued US-based and publicly listed crypto exchange Coinbase, a peer of Binance, alleging the platform allowed its own users to trade unregistered securities.

Coinbase argued that the SEC had failed to provide it with proper regulatory clarification and last week filed a motion to dismiss the agencies’ case.

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