Topic: Us-Based Crypto Exchange Kraken to release significant data to IRS (Read 159 times)

And you're safe from the government asking about your transaction? That's kinda surprising. I'd assume they keep your data even though you asked them to delete your account. It is difficult to trust a third-party service to keep its promise to protect user's privacy considering how often a data leak happens, or how often they sold it to other parties.

That sounds unrealistic unless you're fine with not using any centralized service at all. Wouldn't you risk getting a fine or something similar if you're trying to lie your way through it though? I'd rather not use any service at all if that is the case.

I don't know how far back can they charge you, but in Europe it's only 5 years back. They wanted data from 2016, so if that happened in the EU they'd be able to prosecute only those who did not report taxes after 2018 and by the time they go through all the data and find the exact numbers, it will be late 2024, meaning that only people who traded since 2019 will have something to worry about.

Anyway, I got burned by a similar situation. In 2017-18 banks were blocking transfers from crypto exchanges and I didn't want them to report me anywhere, so I found a local exchange that allowed to withdraw money from an ATM, without the need to send it to a bank. At the time it was the most anonymous way of turning bitcoin into cash that I knew, so I used it for a few months.
Then the exchange announced that they were asked by the government to share the data of and all transfers of people who withdrew from them. They did not have much of my data, but they had my full name, email address, the location of the ATM where I was withdrawing... That was a warning for me to hide everything I do, so I immediately closed my account with them and started looking for an even more anonymous way to exchange.

Bottom line, don't send your private data anywhere. If you just use your full name and address, you can always claim it wasn't you and it had to be someone else who knew you and wanted to hide himself behind an alias. If you send them your ID and withdraw to your personal bank account, it's game over.

RIP to those people who had thought crypto transactions through a centralized exchange won't attract taxes. Well such kind of risks will always be there if you are using a centralised crypto exchange. Doesn't matter if it is a company from United States or from Honolulu Island. As long as these two countries have data sharing agreement, you are screwed.

Kraken is a legal entity in United States. So they are bound to share the data to IRS or to any other government agency. All the best!

Every single user of Kraken shouldn't see anything contradictory with this. There is no contradiction whatsoever. They cannot raise that. Otherwise, they're hypocrites. And they cannot also mention that financial privacy and empowerment are what attracted them toward cryptocurrency. In the first place, they used a centralized exchange, a platform that is licensed and registered and submits to regulatory policies. So, what's actually contradictory is the fact that they're supporting Bitcoin at the same time used a centralized platform for it. What do they expect, that they can have their cake and eat it, too?

Wow, you really did enumerate some scary stuff just to tell us that worrying about KYC is nothing more than a drop compared to the ocean that is the mass surveillance in US, I'm not too invested in learning all this although I know a thing or two about this stuff and given the way you articulated this stuff, I assume that it's a real scary stuff.

Given what @pinggoki just said, I don't feel as mad as I should be about Kraken releasing data to the IRS although I can see why it's still a problem, it's not like IRS purposefully taps in to this mass surveillance stuff to check the taxes and the incomes of the US citizens although I still don't like that Kraken caved in to IRS, I am sure they already know how much you owe them right?

Even peculiar legal decisions from the government regarding crypto users could potentially occur once Kraken's user data is disclosed. kraken should ideally safeguard its users' data privacy unless they aim to witness a decline in their user base, particularly among steadfast Kraken supporters. it's challenging to trust anything coming from the government in relation to crypto. If it benefits the crypto community, there should be no need for data tracking.

I have no intention of protecting suspicious activities, but it's crucial to remember that the government can exercise its authority without constraints, and it's deemed legal. therefore, concerning any crypto-related activities, as long as cryptocurrency hasn't been universally adopted, the government might exploit it to extract from crypto users, whether through substantial taxes or asset seizures without substantial evidence.

Due to the nature of cryptocurrencies, there is a clear boundary between pseudonym identity and KYC-linked wallet. User true identity cannot be tied to its address if and only if they did not use centralized third-parties and themselves does not link any related matter. Since they are using a centralized exchange, they should expect that privacy in the context of within article are given away and they must adhere and comply.

So I think that it just the article author opinion that deem people financial privacy were protected.

I'm not American and not a Kraken user, thankfully, but if you read the terms of service of exchanges, you can often notice that they reserve the rights to do all sorts of monitoring and share their data with various third parties, especially authorities. It's the downside of KYC and of centralized exchanges.
In this case, at least it's limited by transaction volume, although the limits are quite low over a course of a year, and I suppose the IRS is asking for that, so that they can act on it and fine those who haven't paid their taxes properly?

Too late for us to worry about that anyway because even if they don't do that, the US already has a data on you and all they have to know, you freely provide it to them already (driver's license, credit card, ITR and many other government documents you have to fill up) so this isn't really something new or scary anymore. Remember when Snowden leaked what NSA did? Most Americans didn't even bat an eye that their own government is spying on them so nothing to worry. The neat trick is we don't know that they control us already for a long time now.

No one is supposed to feel surprised by these kind of news, really.
It was obvious that it would be just matter of time before the Internal Revenue Service would start to pressure exchanges based in the United States.
Actually, I would have expected exchanges like Binance US, Coinbase and Kraken to have already shared their clients' information with the government.

Though, it is important to point out that these kind of information is most likely to be shared to the European Union and the USA, other countries like those in Latin America, Africa or Asia are less likely to find exchanges willing to comply with such big request of information.
If anyone of you feel this is a clear violation to your privacy, then I would encourage you not to use centralized exchanges whatsoever.

We know that cryptocurrencies need to follow the rules set by regulators in order to be taken seriously. In theory, following the rules set by tax officials could push governments to make clear rules, which would then allow cryptocurrencies to become part of the regular economy. But really, why stop at 2020? The limited time frame makes me very suspicious about the reason for and range of this investigation

However, this action seems to go against the idea of financial privacy that is built into cryptocurrency deals. Cryptocurrencies are valuable because they are decentralized and give people power. Institutional acceptance and protecting the very core of cryptos are at odds with each other in this case. A fine line to walk, isn't it?

Centralized exchanges have to obey to many laws, regulations as well as request from governments and regulatory institutions to keep their business running.

It's a matter of time for a centralized exchange turns on their Mandatory KYC policy on their platform.
Under pressure from government, they can satisfy government by leaking data of their users.

We all know about that risk so it is not a shock news if Kraken exchange do it to the IRS.

Why KYC is extremely dangerous - and useless?

This should not be surprising, it is a central service that collects and maintains data, and they will inevitably provide it to advertising companies or the government, so you should expect that once you use these platforms, your data will be sent to the government sooner or later, directly or through a third party. Will it be considered tax evasion if the data you provided in your tax return is different from what is contained in the Kraken data?
you may need to move this topic to legal board.

Disappointing but not surprising news really. Kraken probably aren’t happy to provide the IRS with this information but if they are told to either comply or be denied to provide services in the US then I am sorry to break the news but they will be handing our info straight over to the IRS. It sucks but this is becoming far more common for crypto firms. They are being forced to comply with increasingly restrictive regulations.