IRS Allowed to Access Circle Crypto Traders Information to Catch Tax Cheaters

A U.S. federal court has authorized the Internal Revenue Service, or IRS, to serve a summons from John Doe on fintech company Circle to obtain all information on U.S. taxpayers who have traded at least $ 20,000 in assets cryptographic data on its platforms between 2016 and 2020.

The notice will apply to Circle Internet Financial Inc., including all “predecessors, subsidiaries, divisions and affiliates, including Poloniex LLC”.

According to the Department of Justice announcement, Justice Richard Stearns concluded that there are “reasonable grounds to believe that cryptocurrency users may not have complied with federal tax laws.”

The document also notes that the IRS “does not allege that Circle has committed any wrongdoing in connection with its digital currency trading activities,” adding:

“The summons seeks information relating to the ‘IRS investigation of a group or class of verifiable persons’ that the IRS has reasonable grounds to believe” may have failed to comply with any provision of any internal tax law ”.

A Circle representative told Law360: “We are looking at [the summons], and of course hope to work with the IRS to respond to the court order. “

Attorney General David Hubbert of the Taxation Division of the Department of Justice said: “Those who transact with cryptocurrency must meet their tax obligations like any other taxpayer. The Department of Justice will continue to work with the IRS to ensure that cryptocurrency owners pay their fair share of taxes. “

Circle was founded in October 2013 by Jeremy Allaire and Sean Neville, the company launching a Bitcoin wallet the following year that would later become its crypto payment app, Circle Pay. In 2018, Circle launched USD Coin in partnership with Coinbase, which is now the second largest stablecoin by market cap.

Circle bought the popular digital asset exchange Poloniex in 2018, but announced that Poloniex would transform into a new company backed by an investment group linked to Tron’s Justin Sun the following year.