As part of a court order, the digital asset exchange company Kraken will be mandated to provide the Internal Revenue Service (IRS) with select user account and transaction information from 2016 to 2020, a recent Coingeek report said. The ruling was made by federal Judge Joseph Spero in the U.S. District Court for the Northern District of California following opposition by Kraken that said the IRS demands were "too broad" and imposed "enormous burdens."
"The Court concludes that this request is not overbroad,” Spero said in the ruling. "Nor is it unduly burdensome.”
In May 2021, the IRS sent Kraken a request for user data to identify accounts that traded digital assets worth at minimum $20,000 in any year between 2016 and 2020, the Coingeek report said. When Kraken refused to comply, the IRS in February asked a federal judge to enforce a summons that was sent to Payward Ventures, Kraken's holding company. In April, Kraken and Payward Ventures filed an opposition to the summons, calling it "too broad" of a request for exchange user information and an "unjustified treasure hunt."
The decision by the district court dismissed Kraken's defense and upheld the summons from the IRS. The exchange must now give the IRS information on 59,351 accounts and approximately 160 million transaction records.
There were, however, requests made by the IRS that were rejected by Spero. While the judge did align mostly with the wishes of the IRS, he rejected its request for information on clients' employment, net worth and source of wealth.
Recent measures have been brought by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTD) against major enterprises.
Binance and its founder, Changpeng Zhao, were named in a civil lawsuit brought by the CFTC in March, the Coingeek report said. The lawsuit charged them with "willful evasion of federal law and operating an illegal digital asset derivatives exchange." Then on June 6, the SEC filed 13 accusations against Binance and Zhao, charging that the company engineered "an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law."
The next day, the SEC also sued Coinbase for allegedly breaking security laws that included operating as an unregistered exchange, the report said.
