Major Canadian cryptocurrency exchange Coinsquare ordered to hand over client info to federal tax authorities

A major Canadian cryptocurrency exchange Coinsquare of Toronto has been ordered to render its client information to federal tax authorities following a first-of-its-kind court ruling. The Federal Court issued an order compelling Coinsquare Ltd. to reveal customer details to the Canada Revenue Agency as it expands its enforcement among cryptocurrency holders and traders. The tax agency has taken interest in cryptocurrency since  2018. It has increased cryptocurrency audits, hired specialized auditors, and built technical expertise. Coinsquare will inform users about the order publicly Tuesday, must provide information on customer bank accounts, transactions, cryptocurrency types, trading activity, “know your customer” documentation, and addresses, according to the March 19 order by Justice Peter Pamel. Customers whose accounts valued at C$20,000 ($16,000) or more on Dec. 31 in the years 2014 through 2020 are affected by the Order.

The court decision marks the first time the agency has used the order, called an unnamed person’s request, on a cryptocurrency exchange. The agency issued it Sept. 18 and said it needed to ensure customers were complying with all duties and obligations. The agency is very likely to send similar directives to other exchanges, and the agreement sets a strong precedent for protecting privacy, Hoisak said.

The ruling also covers customers who accumulated C$20,000 or more since opening their accounts and the 16,500 largest customer accounts by trading volume in Canadian dollars and by number of trades between 2014 and 2020.

The order is the result of a negotiated agreement between both sides and requires Coinsquare to comply by April 6, Hoisak said. The company will also contact affected clients privately.

The agency taxes revenues from cryptocurrency transactions as business income or as a capital gain, depending on the situation.

Jeffrey Newman represents whistleblowers in Securities Related cases in both the United States and Canada. He can be reached at Jeff@JeffNewmanLaw.com or at 617-823-3217