Kraken’s Loss in Court Decision Puts Wealthy Cryptocurrency Traders under IRS Scrutiny

Crypto traders who have conducted transactions of $20,000 or more on the US-based exchange Kraken may soon have their trading information handed over to the Internal Revenue Service (IRS). The IRS had previously requested users’ information from Kraken, but the exchange refused to comply. As a result, the IRS asked a federal judge to enforce a summons issued to Kraken’s holding company, Payward Ventures Inc. After months of back and forth, the judge ruled in favor of the IRS, stating that the summons should be enforced. Kraken is now obligated to turn over approximately 160 million transaction records and provide information about 59,351 accounts.

Kraken had opposed the agency’s summons, claiming that the IRS’s inquiry was an “unjustified treasure hunt.” However, the judge ruled that a summons seeking relevant records will not be denied simply because it requires the production of a large number of records or significant expenditure of time and money.

This ruling comes as part of a broader crackdown on crypto by the US government. The IRS’s win follows a series of enforcement actions taken against Kraken and other crypto exchanges. The Securities and Exchange Commission (SEC) targeted Gemini and Genesis after the fall of FTX, and then focused on Kraken, reaching a $30 million settlement with the exchange for its operation of a staking feature that the SEC alleged was an unregistered offering of securities. Kraken admitted no wrongdoing as part of the settlement.

Most recently, the US government sued Binance and Coinbase, two of the world’s largest crypto exchanges, for allegedly selling unregistered securities. In response to the US’s enforcement actions, firms like Kraken and Coinbase have sought opportunities abroad, obtaining licenses in Ireland and establishing derivatives exchanges in Bermuda and Singapore.

This ruling signifies a significant development for crypto traders on Kraken, as their trading information may now be accessible to the IRS. It also highlights the increased scrutiny and enforcement actions being taken by the US government against crypto exchanges and traders.

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Niels I have been passionate about dogecoin since 2019, and have since become an avid follower and advocate of the cryptocurrency. I keep a close eye on the Dogecoin market and trends, and I'm always up-to-date with the latest news and developments. As a true believer in the potential of dogecoin, I am excited to be a part of the growing community and I'm eager to share my knowledge and experience with others. When not busy with dogecoin, I enjoy golf, and I can often be found on the golf course.

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