The federal court for the Central District of California issued an order on Monday authorizing the United States Internal Revenue Service (IRS) to serve a subpoena on John Doe at SFOX, a Los Angeles-based major cryptocurrency dealer. The IRS filed a lawsuit to receive the order, which directs SFOX to disclose the identities of customers who are U.S. taxpayers and documents related to their cryptocurrency transactions equal to at least $20,000 made between 2016 and 2021.
The IRS filed a lawsuit in the Southern District of New York to also receive a summons from John Doe in SFOX. SFOX’s partner bank, MY Safra, is based in New York. The bank provides FDIC-insured accounts for SFOX institutional traders.
Related: Cryptocurrency Dealer SFOX Gets Letter of Confidence Approval from Wyoming Regulators
The IRS did not allege any wrongdoing on the part of SFOX, according to a Justice Department announcement, which cited the “inherently pseudo-anonymous aspect” of cryptocurrency transactions as one of the motivations for the subpoena. John Doe subpoenas have previously been used by the IRS to obtain information from Circle, Coinbase, and Kraken between 2018 and 2021.
The US Congress has passed reporting requirements for digital assets that will take effect in January 2024 for 2023 taxes, recalls Taxbit’s Miles Fuller. Those requirements may affect the IRS’s use of John Doe subpoenas in the future.
1/ News has leaked to the effect that the IRS has filed court petitions seeking to serve two more subpoenas from John Doe on crypto platform sFOX and its affiliated bank MY Safra. Here is a brief summary of what is going on.
— Miles Fuller (@TaxBitMiles) August 11, 2022
Bloomberg cited analysis published by Barclays in May showing that investors pay less than half of the taxes they owe on cryptocurrency transactions. Bloomberg also includes information that SFOX has more than 175,000 users who have transacted $12 billion since 2015. SFOX was founded in 2014 with backing from Digital Currency Group, Blockchain Capital, Y Combinator, and Airbnb co-founder Nathan Blecharczy. .
This post IRS Summons John Doe at Major Cryptocurrency Dealer SFOX to Find Customers Frauding Taxes
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