IRS’s Request for Kraken’s Customer Record Not Specific: Court

The U.S. Internal Revenue Service (IRS) filed a court request this week to obtain customer information records from San Francisco-based cryptocurrency exchange, Kraken. However, Judge Joseph Spero isn’t ready to authorize the request. The judge thinks the IRS’s request to obtain Kraken’s customer record is overbroad at the moment.

IRS’s Request On Kraken’s Customer Records Too Overbroad

After getting an approval to serve a John Doe summons this week, the IRS has filed to issue the same request to Kraken cryptocurrency exchange.

The John Doe summons, filed in the U.S. District Court for the Northern District of California, asks Kraken to provide account details for users having at least $20,000 in cryptocurrency on the exchange from 2016 to 2020.

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A John Doe summons requires a judge’s approval as it allows the IRS to obtain information about taxpayers who are yet to be identified.

The court has responded, saying the IRS’s request is too overbroad and that it will have to refile with a narrowed version by April 14.

The IRS is looking for basic information such as registration, identification and transaction information, which the court finds invalid.

However, the court finds certain record retrieval as broad categories of information such as “complete user preferences” including records of Know-Your-Customer and correspondence between Kraken and the user or any third party with access to the account.

IRS Must Refile Its Petition Request: Court

The IRS argues that such broad categories of information might be relevant to identifying a user’s account or multiple accounts. However, Judge Jacqueline Scott Corley doesn’t seem to think so. According to him,

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“The IRS should first review basic user information and transaction histories before determining whether further subpoenas  either to the cryptocurrency exchange or to individual users were necessary.” 

Judge Spero stated that the IRS must specify on why certain records are needed:

“must specifically address why each category of information sought is narrowly tailored to the IRS’s investigative needs, including whether requests for more invasive and all-encompassing categories of information could be deferred until after the IRS has reviewed basic account registration information and transaction histories.”

#Customer Records #IRS #John Doe Summons #Kraken


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