North Carolina judge orders Kraken to report customer details to IRS

A judge in North Carolina has ruled that cryptocurrency exchange Kraken must hand over the details on individuals who have traded more than $20,000 in digital currency between 2016 and 2020 to tax authorities.

As per the ruling, personal information on users who have exceeded the threshold will now be turned over to the IRS, in a bid to help root out failures of disclosure to the tax agency.

While the exchange is not alleged to have taken part in any wrongdoing, the court order will mean it is now compelled to act as directed, in divulging information about its users to the authorities.

The IRS said it was seeking information on an “ascertainable group or class of persons” who may have been involved in failures of compliance, as part of its so-called ‘John Doe summons.’

The authorities have also confirmed it will inspect Kraken to ensure it is complying with Know Your Customer rules among other compliance requirements.

IRS Commissioner Charles Rettig said the move was necessary to identify those avoiding paying their due tax on digital currency transactions.

“This John Doe summons is part of our effort to uncover those who are trying to skirt reporting and avoid paying their fair share.”

Acting Assistant Attorney General David Hubbert said it was incumbent on anyone dealing in cryptocurrency to pay their taxes in full: “Those who transact with cryptocurrency must meet their tax obligations like any other taxpayer.”

The IRS is reportedly looking for information on five classes of taxpayer who it thinks may be liable for compliance breaches. These include those reporting a limited income despite trading volumes of $5-$6 million, as well as those operating a number of accounts, and those exchanging fiat to digital currency with no apparent financial gain.

See also: CoinGeek Live panel on Regulation of Digital Assets & Digital Asset Businesses