The post Coinbase IRS Privacy Fight Escalates appeared on BitcoinEthereumNews.com.

Are your cryptocurrency transactions truly private? That question is at the heart of a significant legal battle currently making its way through the U.S. court system, pitting a Coinbase user against the IRS, with the U.S. government stepping in to defend the tax agency’s actions. This isn’t just about one user; it could set a precedent for how the government accesses your digital financial records held by third parties like crypto exchanges. The Heart of the Coinbase IRS Conflict The story begins back in 2016. The IRS was looking into what it suspected was widespread underreporting of income from cryptocurrency transactions. To get a clearer picture, the agency issued a ‘John Doe’ summons to Coinbase. This type of summons is used when the government knows a group of people might owe taxes but doesn’t know their specific identities. It demanded that Coinbase hand over data on a large number of its high-volume users. One of the users caught in this dragnet was James Harper. Like many others, his financial records were requested as part of this broad investigation. This led to a legal challenge, arguing that the IRS’s demand violated his constitutional rights, specifically the Fourth Amendment. Is Your Crypto Data Protected by the Fourth Amendment? This is where the core legal question lies. The Fourth Amendment protects individuals from unreasonable searches and seizures. James Harper’s argument is that his financial records held by Coinbase are private papers and that the IRS summons constitutes an unreasonable search without probable cause or a warrant. However, the U.S. government, in its defense of the IRS, argues against this. Their position, supported by lower court rulings, is that financial records held by a third party, like a bank or a crypto exchange such as Coinbase, are not considered protected personal papers under the…

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Filed under: News - @ May 31, 2025 6:25 pm