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Author Topic: Us-Based Crypto Exchange Kraken to release significant data to IRS  (Read 172 times)
coolcoinz
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November 01, 2023, 03:43:13 PM
 #21

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.

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November 02, 2023, 12:50:59 AM
 #22

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.
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.

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.
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.

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coolcoinz
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November 02, 2023, 05:43:17 PM
 #23

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.
I didn't feel completely safe at the time, but I had a total of between EUR 2 and 3k of transactions, which if you don't have any other income is tax free, so I've decided to do nothing and hope they don't find the amount interesting enough to start their investigation. If I had more than 10k in withdrawals, I'd quickly pay the tax. According to the tax law if you pay what you owe before they officially inform you of an investigation, you can't be charged. That was probably what they were actually trying to achieve. They wanted to scare people enough so that they'd pay up.

Quote
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.
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.

Not "any service at all" just not using a centralized bitcoin exchange that requires KYC. Some exchanges don't require it as long as you stay below a certain threshold. In the EU it's 1k Euro.
You can in fact find exchanges and ATMs where you can withdraw up to that limit anonymously.

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November 21, 2023, 09:09:18 AM
 #24

Well now the sec is suing Kraken exchange over the failure to register. The sec is saying Kraken is operating illegally without first registering with the sec.
Kraken said it will defend in court and the customer funds are safe. https://blog.kraken.com/news/kraken-continues-to-fight-for-its-mission-and-crypto-innovation-in-the-united-states
https://www.fxstreet.com/cryptocurrencies/news/breaking-sec-sues-kraken-exchange-for-staking-securities-202311202229

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November 21, 2023, 09:23:13 AM
 #25

Well now the sec is suing Kraken exchange over the failure to register. The sec is saying Kraken is operating illegally without first registering with the sec.
Kraken said it will defend in court and the customer funds are safe. https://blog.kraken.com/news/kraken-continues-to-fight-for-its-mission-and-crypto-innovation-in-the-united-states
https://www.fxstreet.com/cryptocurrencies/news/breaking-sec-sues-kraken-exchange-for-staking-securities-202311202229

If i were a customer in this exchange i don't think i want to wait around to see if kraken will win or not, even if they claim customer funds are safe, i will take out my funds to safety and let them fix their issue before maybe returning back. This doesn't sound good in my opinion, after agreeing to work with the sec to release customer data now they get a hit from same sec?

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November 21, 2023, 09:33:12 AM
 #26

According the article, increased compliance from cryptocurrency firms could compel government to enact clear and friendly policies towards crypto. Do you agree to this?

Or do see this as contradicts the ethos of financial privacy and empowerment that attracts many people to cryptocurrency?
Which friendly? Governments do not have any friendly policy towards cryptocurrencies, neither now nor in the future. They only pursue one policy, which is complete control while eliminating anything related to privacy.

This is the only case in which governments can have a friendly policy towards cryptocurrencies, I mean when crypto exchanges turn into something more like banks under the complete control of the government.

This thing that governments are seeking is completely inconsistent with the concept of Crypto.

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November 21, 2023, 01:59:21 PM
 #27

Well now the sec is suing Kraken exchange over the failure to register. The sec is saying Kraken is operating illegally without first registering with the sec.
Kraken said it will defend in court and the customer funds are safe. https://blog.kraken.com/news/kraken-continues-to-fight-for-its-mission-and-crypto-innovation-in-the-united-states
https://www.fxstreet.com/cryptocurrencies/news/breaking-sec-sues-kraken-exchange-for-staking-securities-202311202229

If i were a customer in this exchange i don't think i want to wait around to see if kraken will win or not, even if they claim customer funds are safe, i will take out my funds to safety and let them fix their issue before maybe returning back. This doesn't sound good in my opinion, after agreeing to work with the sec to release customer data now they get a hit from same sec?

Interesting to see how this unfolds. It seems the SEC is getting more and more strict in enforcing regulations regarding cryptocurrency exchange. The user data request is just beginning, they are now figuring out what and how exchanges might get persecuted. Nevertheless, judging by information from their press release, they are pretty confident to go into the litigation. I believe a firm and compliant exchange business would surely try to adhere to any regulation or policies required to operate the business, as long as it is clear.

On the other hand, this is a wake-up call for exchanges that serve US customers to aware of this upcoming. This indicates that they may also get the same fate, if they are big enough and did not follow any updates regarding regulation requirements.
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November 21, 2023, 07:50:47 PM
 #28

I know this is a few days old news but I think it is very important and sensitive information particularly about crypto users and their privacy.

According to the article, the IRS has mount pressure on kraken since May 2021 demanding the exchange hand over extensive records on a large number of its American customers. Although Kraken fought back by filling a petition against them but not enough to get the IRS off it's back.

Kraken has agreed to deliver data on users who conducted more than $20,000 in crypto transactions – including trades, deposits, and withdrawals – during any year from 2016 to 2020 according to the article which makes me wonder why stop at 2020?

According the article, increased compliance from cryptocurrency firms could compel government to enact clear and friendly policies towards crypto. Do you agree to this?

Or do see this as contradicts the ethos of financial privacy and empowerment that attracts many people to cryptocurrency?

Source

Well, that was easy see this coming. After what happened to Binance and CZ, I guess no exchange is willing to confront the US government/FED/IRS. There's no way exchanges can fight or withstand that blackmailing going on. So every exchange now will be cooperating with FED or IRS to avoid possible fines, bans, trials etc. They're not trying to kill Bitcoin anymore, but rather trying to control it.
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