Kraken Raises Alarm: IRS to Receive your Bitcoin Trading Data
In a recent announcement, Kraken, a popular cryptocurrency exchange, revealed that it would be complying with a court order to share user data with the Internal Revenue Service (IRS). The exchange will provide details of cryptocurrency transactions exceeding $20,000 made by Kraken customers between 2016 and 2020. U.S.-based users who fall into this category will have their account history, along with personal information such as their name, date of birth, Tax ID, address, and contact details, sent to the IRS. Kraken has already contacted all affected customers via email.
This decision comes after a two-year legal battle between Kraken and the federal government over data sharing. In June, a federal judge ruled in favor of the IRS, ordering Kraken to comply and share the requested information. As per legal documents, approximately 42,017 Kraken accounts will be impacted by this ruling.
The Victory for Privacy Advocates
While Kraken initially resisted providing the IRS with the demanded information, the company framed this compliance as a victory for privacy advocates. According to a spokesperson, Kraken objected to the intrusive nature of the IRS’s requests, which included IP addresses, employment details, sources of wealth, net worth, and banking information. The court rejected these demands, and Kraken sees their successful defense as a stand for the privacy of its clients.
This is not the first time a cryptocurrency company has been forced to comply with the IRS. In 2018, Coinbase, another prominent U.S. exchange, was ordered to provide selective user data to the tax-collecting agency. Similarly, in 2020, a federal court granted the IRS the authority to review records of Circle, a crypto payments company, for transactions exceeding $20,000 made between 2016 and 2020. The IRS also obtained a court order last year to request similar information from SFOX, a crypto prime brokerage.
Protecting Your Privacy
In light of this development, it is crucial for cryptocurrency users to understand the implications and take necessary precautions to protect their privacy. While platforms like Kraken are legally bound to comply with regulatory requirements, individuals can employ strategies to maintain their privacy:
- Use a privacy-focused cryptocurrency exchange or platform that does not collect or share personal information.
- Consider using privacy coins that offer enhanced anonymity features to protect your transactions.
- Utilize cryptocurrency wallets that give you full control of your private keys and enable you to maintain anonymity.
- Implement additional security measures such as using VPNs and encrypted messaging apps to safeguard your online activities.
- Stay informed about the evolving regulatory landscape and seek legal advice if necessary.
By adopting these measures, you can take proactive steps to protect your privacy while engaging in cryptocurrency trading or transactions.
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