IRS Seeks Court Approval to Identify Kraken Crypto Customers

The U.S. tax agency is looking to examine Kraken's books and papers.

AccessTimeIconFeb 9, 2023 at 8:39 p.m. UTC
Updated Feb 10, 2023 at 5:21 p.m. UTC

The U.S. Internal Revenue Service has filed a court document seeking permission to enforce a summons for information against the Kraken crypto exchange and its subsidiaries.

The IRS filed a court petition to enforce its summons on Thursday, with the filing going live just minutes after Kraken announced it would settle Securities and Exchange Commission charges it offered unregistered securities through its staking-as-a-service program.

The IRS said it first issued a summons in 2021, but Kraken has failed to comply.

"Despite discussions between the parties, Payward Ventures Inc. [one of the registered companies that make up Kraken] & Subsidiaries has failed to comply with the summons and has not produced the books, records, papers and other data demanded in the summons. Payward Ventures Inc. & Subsidiaries’ failure to comply with the summons continues to this date," the IRS said in its petition.

According to the petition, "The IRS is conducting an investigation to determine the identity and correct federal income tax liability of U.S. persons who conducted transactions in cryptocurrency for the years ended December 31, 2016, 2017, 2018, 2019, and 2020."

A Krkaen spokesperson said the company had not yet been served with the petition but was aware of the summons.

"One of Kraken’s guiding principles is maintaining the security and privacy of its client accounts. We understand that the Court has expressed concern over the scope of the Summons. The posture of this case has not previously given Kraken an opportunity to weigh in. We look forward to addressing our concerns to the Court," the spokesperson said.

UPDATE (Feb. 9, 2022, 20:53 UTC): Added information on IRS's investigation.

UPDATE (Feb. 9, 21:28 UTC): Adds Kraken statement.


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Nikhilesh De

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.

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