Topic: Kraken to turn over select customer data to IRS after July court loss (Read 300 times)

Let's be honest and say that the American government does not need disloyal exchanges on the American market. Other American exchanges do a great job in the American market, but I wouldn't trade on them. And here my complaints are not only against the American government. Binance and other exchanges very flagrantly violated American laws and thought that they could get away with it.
This is how you can work in Russia, but it won’t work in America.

oh boy, the bad news just keeps a coming.   America doesn't like progress we don't want crypto exchanges here. Isn't that obvious by now? Or i guess it's just that the government needs to get its cut. Kind of like gangsters who own the neighborhood and extort mom and pop shops for "rent"...

Jesse Powell should move his exchange offshore so as not to be tormented of US regulatory requirements

https://www.msn.com/en-us/money/markets/the-sec-sues-kraken-again-this-time-for-running-an-unregistered-crypto-exchange/ar-AA1kitRP
The SEC Sues Kraken Again—This Time For Running An Unregistered Crypto-Exchange

"The U.S. SEC has charged Kraken with operating an unregistered securities exchange, broker, dealer, and clearing agency.
This lawsuit against Kraken is similar to charges filed by the SEC against crypto exchanges Binance, Bittrex and Coinbase earlier in the year.
The lawsuit also alleges Kraken commingled customers' crypto assets and cash reserves with their own holdings.
Earlier this year, Kraken paid a $30 million settlement for charges related to its staking-as-a-service offering.
The U.S. Securities and Exchange Commission (SEC) fired a fresh salvo in its cryptocurrency crackdown on Monday when it sued Kraken for operating an unregistered securities exchange and allegedly mixing customer funds with its own."

https://www.courtlistener.com/docket/68023155/securities-and-exchange-commission-v-payward-inc/

yes, that's what i have heard but say someone sells all their assets like houses and boats and just moves out of the USA and gets citizenship in another country  then i don't see how the IRS can do anything to them. they'll ignore filing tax returns, not have anything to do with the USA ever again and the IRS won't really be able to touch them. unless they get back on a plane to Philly. then all bets are off.   oh and don't make youtube videos bragging about how you never pay any taxes or file any tax returns. that goes without saying though.

which is why you get citizenship in that other country and don't even say the word "american" ever again?

Which is also why the US is one of few countries that charge an expatriation tax. The IRS definitely does not one let go off easy.

I'm no US citizen myself, but the amount of red tape that is involved when doing business with an emigrated US citizen as a (non-US) bank or tax accountant is quite staggering, from what I've heard.

Thank you for the information. This makes it appear that the IRS can do anything they want concerning their request for turning over Kraken customer data to them. I would not use this exchange if I was located or living in the Middle East hehehe. The American government might be using the IRS to crackdown on terrorist funding.

which is why if you're rich and american and don't particularly want to live in the usa, you might look into getting rid of that american citizenship. that's probably why so many rich people do that. for the tax benefits. and who wants to be accountable to the IRS when they're not even in the USA?

yeah they're just looking to chop somebody's head off from the sound of it. 

Yes it is that would be gross violation,
Anway US need more tax payer money to fill up gun for ukraine and the israel government so no wonder they are gonna look for customer who had lot of money especially for crypto

The US is one of the few countries to income-tax their citizens regardless of residency. Accordingly I wouldn't be surprised if the IRS will receive data on every Kraken customer of interest, regardless of citizenship. You know, just in case there's still a US citizen hiding somewhere.



Knowing the IRS, given it's size, Kraken would probably be subject to them even if not an US entity.

Kraken used to be based in San Francisco but they pulled out:

https://cointelegraph.com/news/kraken-shuts-down-global-headquarters-as-san-francisco-is-not-safe

“We shut down Kraken’s global headquarters on Market Street in San Francisco after numerous employees were attacked, harassed and robbed on their way to and from the office.”

However they still say they are a US based entity:

"While we [Kraken] have no plans to change our status as a US-based entity, the location of our headquarters doesn’t affect how we run our business."


If Jesse is American then even if they weren't a US based entity, I think they would be subject to the IRS just because of him. And if he flouted the law then I guess if he stepped on American soil they could arrest him at the airport type of thing.

So unless he also relinquished his american citizenship it wouldn't matter what type of entity they were and where they claimed or considered themself to be based.

that part is not so clear but from the story it sounded like they wanted "tax ID numbers" for these people so I think that applies to americans. tax id could be a SSN for example.

Kraken said that it must nevertheless provide the IRS with profile information and transaction records for customers who transacted more than $20,000 in any year between 2016 and 2020. Specifically, Kraken said that it must provide users’ names, birthdates, tax ID numbers, addresses and contact information, and transaction histories.

that would be a gross violation of people's privacy and I would condemn any company that would hand over peoples' information that didn't even have anything to do with the USA. What business does the IRS have to know what a citizen of some other country is using kraken for? So I'm highly doubtful that they are going to hand that type of info over. probably just on American citizens. On the other hand since Kraken is somehow classified as an american based company maybe the IRS thinks they have the right to examine all of their customers but lets hope not...

And they're gonna be doing it this month!  

Kraken additionally noted that it plans to share the information covered by the court’s order next month, in early November 2023.

Wait wait wait did IRS want all customer data even tho the customer is not from US? or I am missing something here?

If the IRS want all the data it mean all over the world customer are also in it and the IRS can know who has transacted more than 20K in the past year. What the heck is going on?

@larry_vw_1955. If the question is if the IRS could do anything to a company that does not have any type of presence under America's jurisdiction, I reckon not directly and it would be very complicated. It would be much easier for them to enforce the rules on American citizens.

However, is Kraken not an exchange based in San Francisco, California? The founder Jesse Powell is also an American, I reckon.

if Kraken was located outside the usa and didn't have a physical presence there then could the IRS do anything to them? apparently alot of companies like in sportsbetting and poker are afraid to let usa residents sign up. and i'm sure many of them have no connection to the usa as far as any physical presense. i just don't see what the IRS could do to them. how they could exert any control over what they do at all.

and bitcoin being around.  

However, if they are operating under the jurisdiction of America and also accept American customers then American tax laws should and will be imposed on Kraken or the exchange will be cracked down and ordered to stop offering their services in the country.

Nothing is certain except death and taxes.

i thought they were based in the UK or somewhere but apparently not. apparently they are or were based in San Francisco CA. But then I saw this story so now I'm not sure but I think they're subject to the IRS because their founders must be american.

https://cointelegraph.com/news/kraken-shuts-down-global-headquarters-as-san-francisco-is-not-safe


Because they are USA based. otherwise the SEC couldn't have sued them and gotten them to pay.

https://www.cnbc.com/2023/02/09/crypto-exchange-kraken-settles-with-sec-over-us-staking-operation.html

Even though to me i always thought they were based outside the usa, i guess not! 

I can only imagine that they don't report their wealth for so long that the fine is growing rapidly, and the IRS left them so they can just take a ton of money out of them. Sometimes they also deliberately move their wealth overseas to avoid tax, and so on. At least that's what happened in my country. Luckily they don't tax crypto aggressively here.

Yes, here is the problem, especially since they must pay for all the financial returns they received between 2016 and 2020. This may mean that they have to pay large sums of money that may exceed their ability at the present time.

The thing that is fundamentally surprising to me is why Kraken agrees to submit to the IRS,  I am really surprised why they are forced to provide such sensitive data about their users to the American IRS???!!! I don't know if the law forces them to violate their customers' privacy? This is what makes me hate centralized exchanges and avoid them.

if you have the money to pay them, if not then i guess that's where the problem might start. for some reason, rich people that have large fortunes many of them or at least some seem to run afoul of the IRS and owe money that they can't afford to  pay. i wonder how that happens given that they're rich to begin with. you'll hear of some celebrity owing the IRS a million dollars for example and they can't pay. i guess net worth doesn't always translate into being flush with cash. 

This shouldn't surprise anyone. Banks and financial institutions in most cases have to turn in customer data without even a warrant or there being any paper trail to prove the reasons why this had to happen. This is one of the many reasons in the list as to why we shouldn't trust or rely on banks and centralized institutions too much.

Depends, on how far over the $20k is was, if they did file any paperwork on it and a host of other things.
Back when Coinbase sent over a bunch of info (2017? 18? don't remember) there were a lot of people talking gloom and doom about the coming audits. For the most part a lot of people who got letters who could prove that they did not make profits, or at least provided paperwork showing no profit the IRS went away.

The people who mined 100BTC back in 2009 and sold it for 17500 a coin in 2017 and didn't report any of it. They got in some trouble. But for the most part, the IRS is easy to deal with.
Pay them what you owe and they go away.

-Dave

Is there any US exchange that is safe from IRS interference these days?

That meaning, they enforce KYC but they aren't constantly badgered by the IRS about people who transacted more than $20,000 in crypto.

So, it looks like the only way to completely get them off your heels over there is by doing a P2P trade, whether for cash or by bank transfer.

DaveF is right, I have explained this before. It doesn't matter that there is no specific regulation that charges taxes for selling stones that you find in the mountains or dog shit. If you buy a rock or dog shit from me for $1 and sell it for $1K, the IRS is going to want to tax the $999 profit.

i don't know where you got that information from but it wasn't in the linked story:

Kraken explained that it attempted to fight those demands in court and managed to limit the number of clients affected and reduce the amount of data concerned.

Kraken said that it must nevertheless provide the IRS with profile information and transaction records for customers who transacted more than $20,000 in any year between 2016 and 2020. Specifically, Kraken said that it must provide users’ names, birthdates, tax ID numbers, addresses and contact information, and transaction histories.

why would you have to report the income if they didn't expect you to pay taxes on it? you have to pay taxes too i would imagine. also, the way the IRS figures it is, if these people would lie about Kraken then they probably have other lies they're living in the crypto world, good targets for a full audit guaranteed those people will be audited out the rear end...



Dave, I think they're going to get more than letters. They're going to get fully audited. Not just for the past tax year but ever since bitcoin got popular. They'll be put under a huge microscope with their finances and guaranteed they'll end up owing money to the IRS.

Sort of, no matter what if you bought something for $600 and sold it for $18000 you may not have had to pay taxes but you were still supposed to report the income.
Now let's be honest nobody really does that unless you are really making a living at trading.

I think some people are going to get letters from the IRS asking about trades. But, I do not think a lot of people are going to get them.

-Dave

I know when one signs up with a CEX, he automatically gives up his privacy but the level of data IRS is asking for such as IP addresses, banking details, employment information, and sources of wealth are way too much. It's good to hear that Kraken is going to fight back with a lawsuit to limit the data they are going to share with IRS. However, I doubt if the ruling will be in their favour because from the look of things it's like Kraken is being targeted by the US government.

There is something interesting about the continuation of the Kraken exchange case with the Internal Revenue Service (IRS), where I see that in this case there is a challenge filed under the applicable law to the investigation carried out by the IRS.
For example:

Even though in this case there are pros and cons, it seems that the response proposed by Kraken has received a positive response from several groups, even though currently the IRS is looking for extensive information regarding the Kraken case, but whatever happens, we will see the next trial, Whether Kraken's lawsuit against the IRS will result in a positive decision for Kraken, of course this will give rise to a lot of certainty from Kraken, an interesting case to monitor.

The exchange will be required to report information on customers who transacted more than $20,000 between 2016 and 2020.

https://cryptoslate.com/kraken-to-turn-over-select-customer-data-to-irs-after-july-court-loss/

I think 2016 was when there was no rules about crypto from the IRS. You could just buy and sell BTC without paying any taxes or anything. Problem is, at some point maybe 2018 or 19, the IRS started coming down hard on Americans. They wanted to know if they were involved in crypto - making them check a box on their tax return if they were. Now they're going to find out who was honest and who wasn't.  

This is an interesting situation since Kraken is not an american company they are outside the USA. yet the IRS can still tell them what to do and they can't do anything about it.