In a recent ruling, a federal court has mandated cryptocurrency exchange Kraken must provide account and transaction details to the Internal Revenue Service (IRS).

The IRS stated it requires this information to investigate whether Kraken's users have failed to accurately report their taxes.

Earlier this year, the IRS submitted a court petition in the Northern District of California.

This action took place shortly after Kraken settled charges with the U.S. Securities and Exchange Commission, which claimed that the exchange's staking service was in violation of securities law.

The IRS alleged Kraken did not comply with a summons issued in 2021 and was seeking to verify tax liabilities for users who conducted crypto transactions between 2016 and 2020.

As per the court order issued on Friday, Kraken is required to provide information for users who conducted transactions exceeding $20,000 in a calendar year.

The information to be provided includes the user's name (including any pseudonyms), birthdate, taxpayer identification number, address, phone number, email address and various other documents.

Also Read: South Korea Revamps Crypto Regulation Laws, OKs Virtual Asset User Protection Act

Additionally, Kraken must provide blockchain addresses and transaction hashes that are already part of the transaction data it can share.

The exchange is also permitted to produce raw data for the IRS.

Judge Joseph Spero, who presided over the case, seems to have dismissed the IRS's attempt to also obtain employment information and source of wealth from Kraken.

The judge outright denied several of the IRS's requests.

In his analysis of some of the IRS's requests, the judge wrote, "The Court must determine whether the Government’s summons is narrowly tailored, that is, whether it is 'no broader than necessary to achieve its purpose.'

The Court finds that to the extent the first three requests are aimed at establishing the identities of the Kraken account holders who fall within the Doe definition, the information sought in these requests is much broader than what is necessary to achieve that purpose for the vast majority of Doe users."

Read Next: Authorities Confirm New Rules For Singaporean Crypto Firms To Follow, Reduce Risk

Join Benzinga's Future of Crypto in New York City on Nov. 14, 2023, to stay updated on trends like AI, regulations, SEC actions & institutional adoption in the crypto space. Secure early bird discounted tickets

now!

Photo: Shutterstock