US-Based Crypto Exchange, Kraken to Be Served John Doe Summons

A US federal court has allowed IRS to serve Kraken a John Doe summons. This was for customers who transacted from 2016 to 2020 in amounts more than $20,000 in crypto.

The Internal Revenue Service (IRS) once again as opposed to opening up crypto exchanges, is seen slamming through them.

A John Doe’s summons is essentially the IRS admitting that they do not know the identity of the people they are looking for. For some part of it, they may or may not even exist but IRS just wants to go on a fishing expedition. This is not the first time this has happened, it has happened to Coinbase and a number of other crypto exchanges. It does, however, show that the IRS rather comes hunting and carte blanch to asking customers identifying information.

The idea that there is blanket surveillance on everything in order to catch the few criminals is quite overstretched and unnecessary. If the government wanted to search these mass surveillance databases, they need to have a seed or kernel for which they are looking for. Therefore, they need to be actually looking into someone, to begin with, and mass surveillance does not ever help to catch criminals in this way. Mass blanket surveillance of everyone’s financial transactions does not make any sense. Information related to people does not come from them just mass collecting but from other sources too.

Such actions denote that we are increasingly living in a less and less free world and a more surveilled society. The John Doe summons is not just there because IRS suspects that people are doing something illegal, they just want the control. They want to be able to see what people are doing with their money.

There are several expert opinions that say that Catching criminals with mass surveillance is not the right approach.

On the flipside, Kraken has been in a rough place with this latest surveillance. It has an obligation to its customers that typically fall into the libertarian sphere of Bitcoiners not wanting to be tracked by the government. However, at the same time it is well-known that they are looking to go public within the next year. This essentially means that they have to comply with whatever the government says to them.

This is the same kind of trajectory that was seen with Coinbase. They had instances like this where they had to fork over some stuff to IRS or whoever. That is just part of the process of going public in the US. You have to comply with what the government says in order to reach the broader audience in that part of the market.

It also happened to Circle last month when it owned Poloniex and similar summons were issued to them.

It was earlier this year that IRS revealed its plans to detect hidden cryptocurrency transactions, calling it as operation hidden treasure. IRS further revealed that they had forces trained in cryptocurrency that would expose any sort of tax evasion with regards to it.

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