Kraken Ordered to Turn Over Its Users’ Information to the IRS
Cryptocurrency exchange Kraken was ordered by a judge to provide a variety of information about its users to the Internal Revenue Service (IRS) for the agency’s investigation of underreported tax liability.
The IRS has said it wants information on Kraken accounts that did at least $20,000 of cryptocurrency trading in any single year. Additionally they were looking for transactions from 2016 to 2020. This request is similar to what the IRS asked of Coinbase several years ago, but Kraken had called the agency’s summons an unjustified treasure hunt arguing it went well beyond what as asked of Coinbase.
The IRS statement said that they have a legitimate purpose for seeking the materials requested. They are looking to determine the identity and correct federal income tax liability for users in the designated time period. Relatively speaking, crypto traders are small fish compared to the fraud that's allowed to happen in traditional markets. Yes, there is a lot of trading activity that occurs on Kraken which is not reported. However what does that actual dollar amount to? Kraken is a top crypto exchange with daily trading volume of roughly $650 million globally. So with that, the judge agreed with the IRS’s evidence that under-reporting of income is “substantially" higher where there is no third-party information reporting, as is the case with Kraken...
Things are continuing to heat up with a deepening US crackdown on cryptocurrency. Not only is the IRS cracking down, but the Securities and Exchange Commission (SEC) this month filed separate lawsuits accusing Coinbase of running an illegal exchange. They also blasted out allegations that Binance.US broke securities rules, mishandled customer funds, and misled investors.
The late half of 2023 and 2024 are going to be the years of regulation and consolidation within the industry. We have already seen exchanges like Bittrex and Kucoin folding or leaving markets over regulatory concerns. It will be interesting to see how all this plays out and I hope it does not kill the industry...
https://twitter.com/lee19389/status/1675847832274599939
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Hope this wouldn't backfire later on though
Only time will tell!
The SEC and their lawsuits might pretend to protect investors, maintain fair and transparent markets, but we all know everything is done to their benefits. They are safeguarding the interest of anyone but themselves.
Exactly, the rich will get richer and use whatever tool they need to. In this case it is the regulators.
I guess the good news is we know the dollar amount we need to stay under in any given year. Just keep it below $20,000. Maybe use a few different exchanges if you have to move more than that. I haven't used Kraken in close to five years now.
This seems to be an amount that has been the benchmark with a few of these requests. I think small retail investors should not be worried it is just more of an annoyance because it is so darn hard to do your taxes if you even want too.
Yeah, that is a good point. Part of the reason I stick to Coinbase even though they drive me crazy.
I think any exchange that deals with the FIAT, that would only make things hard for them, and they can get closed any time. Just dealing with altcoins alone is one way to avoid the issues related to the raids like these from IRS.
It's going to be tough because regulators are pressured to keep traditional markets the primary markets.
Kraken may call it quits in the US now too. It sounds like the judge gave them a fishing expedition to grab all of that information without clear suspects. Soon no exchanges will want to do business in the US at all.
Most likely so. At some point the US will be a too tough to deal with and will fall behind in the space.
Very sad but it very true...
Really, they would get a more cost effective return if they went after the Bidens and SBF alone than go after a bunch of small fry.
People in power will always get away with what ever they want. I think the Biden news is noise as all politicians do the same thing.
I am kinda happy for the similar 'news'. It highlights several very important facts. I always riding on privacy, as the survaillance maniac private, corp, gov orgs are really playing gods over everybody, and they even try to paint the picture, it is normal, and very good for everybody, especially for any given person.
Similar things will show the most important basic part of crypto. Privacy. It was just a decade ago when the BTC fairy tale created, highlighting privacy. It seems to me, people completely forgot...
and the 'don't use any KYC exchange' part is also a very basic thing, so real crypto enthusiasts won't be hurt at all, nor hunted by similar orgs like irs, as they exactly know how important are these things.
If you need to get your money back to fiat you will need to kyc. There is not enough of a infrastructure to buy everything you need with crypto.
Sorry, but that is not true. Yes, generally, that cost maybe 1-2% more, and the options are getting limited, but there are still enough 'small gates', what are left open purposely, same like in the fiat world. Of course, finding them takes some effort, but not much.
I don't suppose, you don't know any of these ways. However, I admit, that kyc services are the easiest and fastest way to get back some fiat from crypto, and I am not proud of that, but partly I use that, too. (The only part what for I use KYC services (but not exchanges) in crypto world, even like that 'who knows how I get that crypto to my account?'. )
once again, it's not the only way, and personally, I think, they will keep some of the options open, because they use them, too.
probably a good example the Monero and several other privacy coins ban on some exchanges, just recently in the west. Strangly enough, if you want to 'finance a war' (gifting it to who knows who) from the very same countries, that's perfectly okay, you can do that... it's getting very similar like financial system, probably, because the very same normies make the 'rules'...
Kucoin now require the kyc. When you go into the account, you see the non kyc no service. So i just sold all my altcoins, as they say non kyc no service. Its not a big problem as i just put it in my wallet !
I moved all of my crypto out since US users cannot KYC with the. I don't have any exchanges that I can trade futures on now.
It’s a wild goose chase. They will continue this shit until they somehow find a way in.
I think it's a bit of that and trying to look like they are doing something. Optics are more important than results.
The crackdown is real and I honestly don't know if it would be worth it. In a way, nobody will know until the audits happen but I have a feeling that it is just a power play to force Kraken into following the regulations. I don't think it will kill the industry but we will be in an environment where everything going in and out will be monitored.
The way we saw a lot of problems a while back is that it's very good that you're doing things this way, which will reduce the number of fraud methods. And people won't commit fraud that way either. The more strict it is, the better it is for those who use it.
Isn't it illegal to share the personal information of your users?
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