A federal court ordered crypto exchange Kraken to hand over account and transaction information to the Internal Revenue Service (IRS), which said it needed the information to determine whether any of the exchange’s users had underreported their taxes.

According to the order released on Friday, June 30, Kraken is required to provide details of users who have transacted more than $20,000 in a calendar year, including their names (real or pseudonyms), date of birth, tax identification numbers, addresses, phone numbers, email addresses and various other documents.

In February, the IRS filed a lawsuit in the Northern District of California shortly after Kraken reached a settlement with the United States Securities and Exchange Commission (SEC) over securities law violations related to its staking service. The IRS claimed to have issued a summons to Kraken in 2021, which the exchange failed to comply with, and is now seeking to investigate potential tax liabilities of users who made crypto transactions between 2016 and 2020.

Screenshot of a court order requiring user data. Source: Courtlistener

In addition, he will have to release the Kraken blockchain addresses and transaction hash, which are already included in the transaction data available for sharing. The exchange may also be required to provide raw data to the IRS.

Judge Joseph Spero, who presided over the case, appears to have rejected the IRS’s attempt gain job information and source of wealth from Kraken. The judge flatly rejected several of the IRS’s requests.

In considering some of the IRS’s requests, the judge said the court must make sure the government’s subpoena is appropriately focused, meaning it should not go beyond what is necessary to achieve its intended purpose.

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According to the Court’s findings, the information requested in the first three requests to identify Kraken account holders falling within the definition of Doe is too broad and goes beyond what is necessary for the majority of Doe users to establish their identity.

The government’s decision on Friday comes amid a deepening US crackdown on cryptocurrencies. Securities and Exchange Commission this month filed separate lawsuits accuses Coinbase of operating an illegal exchange, alleging that Binance.US mishandled customer funds, misled investors and regulators, and violated securities rules.

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