Swedish bitcoin exchange BTCX, has been requested by the local Tax Authority to disclose transaction history of the company's 20,000 customers. The exchange is taking the Swedish Tax Authority to court, arguing that by doing so, all its clients' identities would be disclosed.
The tax agency has requested BTCX to disclose information about customers' buying and selling of bitcoins, partly to get information about how many bitcoins are bought and sold, reported local media outlet DN.se.
But according to BTCX, the request also means that the exchange will have to disclose the "unique code," or ID number of each customer linked to his or her digital wallet. Along with personal information, this would reveal all clients' identities and harm their privacy.
On a larger scale, this would also enable the authority to track user transactions beyond the BTCX exchange and identify transfers between individuals or companies on the overall bitcoin network.
20,000 people could be affected by this request, all of which are Sweden citizens, according to Christian Ander, CEO of Goobit, the owner and operator of BTCX.
"It seems to them as if they were only asking for snapshots," said Ander. "But [this actually means that] they would be able to see all history and all that had happened. They would also be able to follow everything that will happen in the future."
He added:
"Our customers are not at all prepared for this. It would be extremely intrusive if this kind of information came out, including bank statements on all bank accounts in perpetuity. We are wondering if this situation is exactly what the Swedish Tax Authority is looking for, or if they do not know what they are doing."
BTCX has taken the issue to the Administrative Court and requested not to comply with the tax authority's demand.
"By obtaining all the company's bitcoin wallets, this would simultaneously give them access to all the company's customers’ bitcoin addresses," the company said.
"We hope that bitcoin addresses will be considered as private matters," Ander further stated, adding that he is willing to assist authorities in investigating on criminal activities, if done in the "right way":
"If there is an investigation on a particular crime, we will help. We have done so with the police on several occasions."
Owned by Goobit AB, BTCX is said to be the largest bitcoin exchange in Sweden. Earlier this month, the company received an undisclosed amount of venture capital fund from Swedish VC firm called Service Ventures.
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