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IRS Approved to Seek Records of Kraken Users Transacting Over $20K in Crypto

A U.S. federal court authorized the move Wednesday.

May 6, 2021 at 7:32 a.m. UTC
Updated Sep 14, 2021 at 12:51 p.m. UTC

A U.S. federal court has authorized the Internal Revenue Service (IRS) to begin serving a John Doe summons on cryptocurrency exchange Kraken and its subsidiaries in a bid to catch tax dodgers.

According to a press release on Wednesday, the Northern District of California entered an order authorizing the IRS to seek those who have conducted at least $20,000 in crypto transactions on the platform.

Kraken's subsidiaries and its U.S.-based parent company, Payward Ventures, are being asked by the IRS to produce records identifying U.S. taxpayers who “may have failed to comply with internal revenue laws.” A John Doe summons is a tactic used by the tax department to request information on people it can not identify by name.

The IRS is seeking the records of U.S. citizens who engaged in business with or through the exchange during the years between 2016 and 2020. Kraken is not being investigated for wrongdoing, according to the release, but the summons are an attempt to bolster the tax department's “investigation of an ascertainable group or class of persons.”

Tax guidance from the IRS has been reissued outlining the treatment of cryptocurrency as property, with all the relevant accompanying federal tax burdens.

Kraken is not alone. Last month, cryptocurrency payments firm Circle was also targeted by an order from a federal court in the District of Massachusetts. The order similarly requested identifying documents from all Circle and Poloniex customers who transacted over $20,000 between 2016 and 2020.

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