Kraken Warns Users: Your Bitcoin Trading Data Is Headed to the IRS

Saint-loup

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Quote from: Husires on November 18, 2023, 10:44:28 PM

In some countries there are laws such as GDPR, which oblige the service provider to keep customer data as long as it is necessary. It is true that they tell you that they delete it, but they do not. The best you will get is that it will not be sold or deleted after 5 years or 10 years according to the local law and the desire of the platform. In preserving the privacy of its customers, most platforms do not want to do that.

It's the first time I see someone invoking GDPR in order to use it against customers rights. AFAIK the General Data Protection Regulation (GDPR) has been made for protecting the privacy and the rights of individuals and to impose obligations onto organizations that collect, process, and/or store their datas, not the opposite. It focuses on ensuring transparency, consent, and secure handling of personal information, not on collecting and storing them how they want.
https://gdpr-info.eu

ffandprofit

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Nothing new nor surprising here, at the moment you do the KYC you know your data will be shared, be it with the authorities or with some other company seeking costumers interested in the bussines of the one you did the KYC with
Of course, kraken could have avoided it, I personaly though they would back when they started refusing the service in some countries and territories, but still, predictable

electronicash

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if they didn't have plans to shared customers data, they should have moved elsewhere like Panama.
too late for the suggestion though and Kraken users are gonna be closely monitored lol.

kraken was one of the popular exchange wince 2016. i did have an account here but i think that time they were not asking for KYC. it was the time of ICO which ICONOMI (ICN) was first listed there.

DaveF

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Quote from: stompix on November 19, 2023, 09:37:50 AM

Quote from: Lucius on October 30, 2023, 11:50:35 AM

I wonder how many US users have used any CEX without thinking that sooner or later the IRS won't get their data? The IRS already showed a few years ago that it wants such data in the case of Coinbase, and there should be no doubt that every CEX operating in the US will have to cooperate with the IRS or lose its license.

Probably less than the general public assumes, people in the US are far more used to paying taxes, doing annual fillings, and all that stuff, one of the reasons we have that many apps that do all the accounting for you when it comes to crypto trading targeted at the US market.
In the past maybe, after all the user base was not that IRS friendly, but as that changed, and normal less tech-savvy with less libertarian views make the bulk I think it will be more like 5-10% trying some sort of tax evasion and 90 compliance!

Beyond that, a lot of people don't care.

If you bought BTC @ $30,000 and sold at $36,000 the IRS taking a 28% chunk of that $6000 hurts.

If you bought at $400 back in 2014 and sold at $36,000 last week you are paying 20% long term capital gains so you are giving $7000 to the tax man.

Some people will scream and yell. Others are fine with the massive profit and like this country and support it and feel paying taxes is their patriotic duty to support the country.

Others, (DaveF) are just too lazy to bother and pay more in their taxes then they should since the cost of time and effort of tracking every buy and sell is not worth the time and put everything in at $1. If the IRS wants to come and audit and find out that taxes were overpaid and give a refund that's fine too.

-Dave

stompix

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Quote from: Saint-loup on November 18, 2023, 05:10:19 PM

I don't understand why Kraken keep datas for such a long time, 2016 it's 7 years ago, if they really didn't want to collaborate with US agencies or other authorities, they should have offered an option to customers to allow them to delete their histories.

Because that would mean they would have gone straight to jail?

These are not personal details, pictures of puppies or you drinking while on holiday this is financial data, forget the US, under EU law every accountant has the obligation to archive and keep accounting data for the companies he works with for 10 years based on the date of the bills or settlements, failure to do so goes from fine to jail time. If Kraken had dumped that data there would be no Kraken now.

Quote from: Lucius on October 30, 2023, 11:50:35 AM

I wonder how many US users have used any CEX without thinking that sooner or later the IRS won't get their data? The IRS already showed a few years ago that it wants such data in the case of Coinbase, and there should be no doubt that every CEX operating in the US will have to cooperate with the IRS or lose its license.

Probably less than the general public assumes, people in the US are far more used to paying taxes, doing annual fillings, and all that stuff, one of the reasons we have that many apps that do all the accounting for you when it comes to crypto trading targeted at the US market.
In the past maybe, after all the user base was not that IRS friendly, but as that changed, and normal less tech-savvy with less libertarian views make the bulk I think it will be more like 5-10% trying some sort of tax evasion and 90 compliance!

Quote from: sokani on October 28, 2023, 05:06:01 PM

This is an invasion of privacy.

Lol, no it's not!
You're deliberately using a financial platform for financial gains, you want to keep that data secret by claiming privacy? Common!
What's next, refusing a customs check at the airport by claiming privacy on your underwear?

Antotena

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Quote from: Oshosondy on October 27, 2023, 06:06:20 PM

After two years of battle between Kraken and the United States federal government over data sharing. In June, the battle was lost by Kraken. Federal judge ordered Kraken to share customers trading information with the Internal Revenue Service (IRS). According to Kraken, information of those with over $20000 trading transactions would be shared with the government, data from 2016 to 2020 will be shared.

Quote

The company, specifically, will share information regarding cryptocurrency transactions above $20,000 made by Kraken customers between 2016 and 2020. U.S.-based users who made such transactions will have their account history sent to the IRS along with their name, date of birth, Tax ID, address, and contact information.

Kraken will share it by early November which is some days away.

https://decrypt.co/203507/kraken-warns-users-bitcoin-trading-data-irs

They are probably have been avoiding taxes, a company is not meant to be avoiding taxex when fully they know that they have been making money from their citizens. I blame them though but the way US fight her crypto companies that avoid taxes is very alarming, why not just charge them and then let them pay and continue from their even though kraken is wrong to that in the first place. Now, they will be allowing internal revenue service to access public information, who knows if they don't keep that details under their watch.

The more I see centralized exchanges gives you comfort in some part of their features, they are always dangerous to use, one or the other do violated laws and they always expect the users to do the same. If it's were customers that violated this rules, they will not only suspend your account, they will also ban you and restrict you from having access to your funds. Trust them at your own peril.

royalfestus

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Unfortunately, Kraken did not build a larger customer base beyond North America, like Binance, which they can fall to, so I think they will struggle. There should be a lot of money invested in decentralised exchanges and larger users with the attack on CEX

Husires

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Quote from: Saint-loup on November 18, 2023, 05:10:19 PM

I don't understand why Kraken keep datas for such a long time, 2016 it's 7 years ago, if they really didn't want to collaborate with US agencies or other authorities, they should have offered an option to customers to allow them to delete their histories. Most people don't need to keep an history older than 2 years, and many of them are not even aware their old datas are stored by the exchange.

In some countries there are laws such as GDPR, which oblige the service provider to keep customer data as long as it is necessary. It is true that they tell you that they delete it, but they do not. The best you will get is that it will not be sold or deleted after 5 years or 10 years according to the local law and the desire of the platform. In preserving the privacy of its customers, most platforms do not want to do that.

Saint-loup

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I don't understand why Kraken keep datas for such a long time, 2016 it's 7 years ago, if they really didn't want to collaborate with US agencies or other authorities, they should have offered an option to customers to allow them to delete their histories. Most people don't need to keep an history older than 2 years, and many of them are not even aware their old datas are stored by the exchange.

Lucius

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Quote from: Rikafip on October 30, 2023, 01:00:39 PM

~snip~

I think that many people were under the misconception that Bitcoin is something anonymous and that the companies that enable trading protect their data, but the truth is that the IRS sent some of the biggest criminals in the US to prison, and I am sure that they will catch many crypto traders as well.

I wouldn't bet that tax collectors in the whole EU will ever be at the level of the IRS, because each country has its own rules, and our areas are still far from the efficiency of Western Europe. However, we should always consider that some ambitious official will come up with such an idea, so if someone already trades through CEX, then pay the tax and sleep peacefully.

robelneo

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The Terms of Service are useless against regulators and this is a warning or precautionary to those who believe that the information that they have in these exchanges is safe, even if the exchange doesn't want to break their users' trust if the court orders it then they have nothing to do but to give in or be charged with contempt.
This decision will create panic among US citizens on other exchanges so in case you are a US trader you will have to change your strategy or be ready for the same scenario, since this decision comes in the US court I have this feeling that the decision could be adopted by other local courts, I will have to check my local exchanges if they are lenient on adopting this court decision.

Oshosondy

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I can read in some people's post that this is invasion of privacy. I will say it is not invasion of privacy like that because once we pass our KYC documents to exchanges for verification, we do not have the privacy again. One of the reasons I created this topic is because people can know how KYC can be of disadvantage. But some people have no option than to make us of these CEX, because they are traders and they trade often. But for people to have privacy, centralized exchanges should be avoided.

The Cryptovator

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This is one of the disadvantages of using centralised exchanges. When we are using centrlaised exchange, this kind of action is expected. The exchange has to obey the government rules if they want to run business there. Otherwise, Exchange will have to encounter law enforcement action. No central exchange is able to protect our privacy when forced by a government agency. We have to accept that truth and find alternatives like Dex Exchange. Otherwise, anytime, the government will get our data, and we will have to face troubles.

Rikafip

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Quote from: Lucius on October 30, 2023, 11:50:35 AM

I wonder how many US users have used any CEX without thinking that sooner or later the IRS won't get their data?

I guess anyone with brain could have known that IRS will eventually get CEX info, given how notorious and efficient that service is, unlike the one in our country (but they are also slowly getting "better".)

Its just a matter of time before we get the same thing in Europe too, so better be prepared for that or simply avoid CEX.

Lucius

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I wonder how many US users have used any CEX without thinking that sooner or later the IRS won't get their data? The IRS already showed a few years ago that it wants such data in the case of Coinbase, and there should be no doubt that every CEX operating in the US will have to cooperate with the IRS or lose its license.

I don't see why any CEX would even legally fight such claims when there are laws that allow any court to rule in favor of the IRS - unless someone thinks they can trade cryptocurrencies perfectly legally and invoke privacy and data protection when it comes to paying taxes?

rat03gopoh

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Quote from: sokani on October 28, 2023, 05:06:01 PM

I doubt if this was captured in the terms of service.

Such ToS definitely exists.
Exchanges wanna be legally protected, so they have to offer comparable "exchange", no matter how strict they become.
One of them asks users to force KYC for regulatory purposes, even though the exchange knows that this has actually been a problem for some traders.

Darker45

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Quote from: sokani on October 28, 2023, 05:06:01 PM

Quote from: Darker45 on October 27, 2023, 10:14:46 PM

Although there surely are general stipulations in the terms of service that would support this, I wonder if Kraken users would have agreed to a term that specifically mentions that the exchange shall share trading information of users with the IRS.

Concerning the sharing of data with a third party agent or government entity, I doubt if this was captured in the terms of service. I believe most users must have created their accounts and have been trading with it before the government came up with their tax.

I guess data sharing is generally captured in the terms of service. In the first place, how can Kraken comply with AML/CFT policies if they won't share collected data with the appropriate agencies? I guess this part is widely acceptable. The fact that a user complies with compulsory KYC is more or less an expression that he/she accepts it. But I don't think that includes the willingness to share how much one trades. That's another thing because surely a lot of users aren't declaring everything to their tax agencies.

Quote

Based on the situation of things right now, I don't think deregistering one's account will be of any good since the user's data will still be captured on the compiled list that will be sent to IRS.

Oh yes, of course, deleting one's account doesn't mean deleting one's information from Kraken's database.

sokani

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This is an invasion of privacy. According to the article they will also be requesting for:

Quote from: Darker45 on October 27, 2023, 10:14:46 PM

Although there surely are general stipulations in the terms of service that would support this, I wonder if Kraken users would have agreed to a term that specifically mentions that the exchange shall share trading information of users with the IRS.

Concerning the sharing of data with a third party agent or government entity, I doubt if this was captured in the terms of service. I believe most users must have created their accounts and have been trading with it before the government came up with their tax.

Based on the situation of things right now, I don't think deregistering one's account will be of any good since the user's data will still be captured on the compiled list that will be sent to IRS.

Husires

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It is not a war, but you must know that all your data from the moment you send it to CEX is registered and will be sent to legal parties or even to third parties to sell for advertising purposes. Some legislation and laws may stand with you, but the final outcome is that data will be shared, especially with government agencies such as the Internal Revenue Service (IRS), but the return of data until 2016 makes it necessary for you to download your account data and verify it continuously to ensure that you are paying the correct tax.

Darker45

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Although there surely are general stipulations in the terms of service that would support this, I wonder if Kraken users would have agreed to a term that specifically mentions that the exchange shall share trading information of users with the IRS. Had this been specifically stipulated in the terms of service upon sign up, many would probably have opted not to proceed. This latest development is rather unfair.

This is another proof that whatever is agreed between a centralized platform and a user upon sign up is almost pointless. The demands of the government or the court always prevail. It's like an exchange saying they won't implement KYC or that only this and that data are required but once the government orders them to collect such and such information, they have no choice but to comply and whatever was agreed earlier between them and their clients will go to the trash bin.

Wiwo

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The war against crypto users' privacy is gradually being won by the government, and this all is motivated toward achieving cryptocurrency taxation and if this goes fully live then a lot of those who may have evaded taxes true the cryptocurrency trade will have the law to face and this is the many disadvantages of using centralized regulated exchanges.

We know that cryptocurrencies that are decentralized like Bitcoin may not be available for such regulation and third-party forces from the government such as this if the Bitcoin is being held in a self-custody wallet, but then its services such as exchanges are the most targeted and only window through which authorities will get access into users/traders information, although I still don't know what the punishment will be for those in this category that is those that have traded above the said limits, without tax remittances.

Oshosondy

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After two years of battle between Kraken and the United States federal government over data sharing. In June, the battle was lost by Kraken. Federal judge ordered Kraken to share customers trading information with the Internal Revenue Service (IRS). According to Kraken, information of those with over $20000 trading transactions would be shared with the government, data from 2016 to 2020 will be shared.

Quote

The company, specifically, will share information regarding cryptocurrency transactions above $20,000 made by Kraken customers between 2016 and 2020. U.S.-based users who made such transactions will have their account history sent to the IRS along with their name, date of birth, Tax ID, address, and contact information.

Kraken will share it by early November which is some days away.

https://decrypt.co/203507/kraken-warns-users-bitcoin-trading-data-irs

Topic: Kraken Warns Users: Your Bitcoin Trading Data Is Headed to the IRS (Read 191 times)