According to a statement from the U.S. Department of Justice dated April 1, 2021, a federal court in Manhattan issued an order authorizing the IRS to serve a subpoena from John Doe to cryptocurrency payments company Circle and its subsidiaries, including cryptocurrency exchange Poloniex.
A John Doe subpoena is an investigative tool used by the IRS to obtain information about unidentified US taxpayers. In this case, an attempt will be made to force Circle to provide information about users who made cryptocurrency transactions totaling at least $ 20,000 between 2016 and 2020.
“Those who trade in cryptocurrency must meet their tax obligations like any other taxpayer,” said Deputy Attorney General David A. Hubbert of the Department of Justice’s tax department, according to the press release. “The Justice Department will continue to work with the IRS to ensure that cryptocurrency holders pay their fair share of taxes.”
As a result of the disclosure, Circle has not committed any wrongdoing in its exchange process. Rather, the subpoena was issued because “the IRS has a reasonable basis on which to believe [its users] “May have violated a provision of internal tax law.”
The reasons given in this press release are reminiscent of a regulation proposed by FinCEN according to which many in the field of cryptocurrency would violate the privacy of Exchange users. It can also be seen as an indirect step by authorities trying to regulate sovereign transactions, which incidentally are the lifeblood of systems like Bitcoin.