UPDATED 21:26 EDT / APRIL 01 2021

BLOCKCHAIN

IRS obtains approval to seek customer records from cryptocurrency firm Circle

The U.S. Internal Revenue Service has obtained authorization for a “John Doe Summons” that seeks to unmask high-value customers at cryptocurrency service provider Circle Internet Financial Inc.

The summons, approved today by the federal court in the District of Massachusetts, demands that Circle along with its predecessors, subsidiaries, divisions and affiliates, including Poloniex LLC, hand over records of U.S. taxpayers who conducted at the least the equivalent of $20,000 in cryptocurrency transactions during the years 2016 to 2020.

The IRS is seeking the records, unsurprisingly, as part of an investigation into tax fraud. The IRS claims that because transactions in cryptocurrencies can be difficult to trace and have pseudo-anonymous aspects, taxpayers may be using them to hide taxable income.

“Those who transact with cryptocurrency must meet their tax obligations like any other taxpayer,” Acting Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division said in a statement. “The Department of Justice will continue to work with the IRS to ensure that cryptocurrency owners are paying their fair share of taxes.”

There is precedent in the IRS chasing cryptocurrency firms for customer records, with a similar order made against Coinbase Inc. in 2017.

Why Circle is being targeted now is not clear. Although Circle is fully registered and legally operating in the U.S., the mention of Poloniex in the filing may give some hint. Circle purchased Poloniex for $400 million in 2018 and although it has since spun the company off again as a standalone exchange, Poloniex still offers a far wider-ranging cryptocurrency trading platform. Officially, the IRS is not alleging that Circle or Poloniex has engaged in any wrongdoing.

Since the Poloniex purchase in 2018, Circle has kept busy, seeking a banking license and launching its own U.S. stable coin. It was reported in March 2019 that Circle was seeking to raise additional venture capital ahead of a possible initial public offering, although the company has yet to pursue a public offering.

Circle has raised $271 million to date, according to Crunchbase, from investors that include Bitmain, IDG Capital, Breyer Capital, General Catalyst, Accel, Digital Currency Group, Pantera, Blockchain Capital and Tusk Ventures.

Image: Circle

A message from John Furrier, co-founder of SiliconANGLE:

Support our open free content by sharing and engaging with our content and community.

Join theCUBE Alumni Trust Network

Where Technology Leaders Connect, Share Intelligence & Create Opportunities

11.4k+  
CUBE Alumni Network
C-level and Technical
Domain Experts
15M+ 
theCUBE
Viewers
Connect with 11,413+ industry leaders from our network of tech and business leaders forming a unique trusted network effect.

SiliconANGLE Media is a recognized leader in digital media innovation serving innovative audiences and brands, bringing together cutting-edge technology, influential content, strategic insights and real-time audience engagement. As the parent company of SiliconANGLE, theCUBE Network, theCUBE Research, CUBE365, theCUBE AI and theCUBE SuperStudios — such as those established in Silicon Valley and the New York Stock Exchange (NYSE) — SiliconANGLE Media operates at the intersection of media, technology, and AI. .

Founded by tech visionaries John Furrier and Dave Vellante, SiliconANGLE Media has built a powerful ecosystem of industry-leading digital media brands, with a reach of 15+ million elite tech professionals. The company’s new, proprietary theCUBE AI Video cloud is breaking ground in audience interaction, leveraging theCUBEai.com neural network to help technology companies make data-driven decisions and stay at the forefront of industry conversations.