The U.S. government has asked the Supreme Court to reject a Coinbase user’s attempt to stop the IRS from accessing his cryptocurrency transaction records.
In a May. 30 filing, Solicitor General D. John Sauer argued that Coinbase user James Harper can’ use the Fourth Amendment to block access to his financial records held by the exchange.
The government said that Harper “willingly” provided his information to Coinbase and that the IRS obtained it through a court-approved summons, following the proper legal process.
Coinbase user sues IRS over crypto data
Harper’s case revolves around a 2016 IRS investigation into widespread underreporting of profits from cryptocurrency. At the time, the IRS noticed a massive discrepancy between the millions of Coinbase users trading Bitcoin and the small number of taxpayers reporting their crypto earnings.
The agency responded by obtaining a “John Doe” summons requiring Coinbase to provide records on its high-volume customers. Harper, who bought and sold Bitcoin on Coinbase during that time, later filed a lawsuit that the IRS’s actions were an unconstitutional search of his personal records.
Lower courts disagreed, ruling that Coinbase’s records are business documents, not Harper’s personal papers and that the IRS acted lawfully.
IRS crypto probe backed by legal precedent
The government claimed that Supreme Court rulings support the IRS’s position. They referenced past cases like United States v. Miller to show that people don’t have a reasonable expectation of privacy in financial records held by third parties like Coinbase.
The filing also referred to Coinbase’s privacy policy, which warned users that their information could be shared with law enforcement. Further, the government said:
To the extent petitioner made those arguments below, the court of appeals correctly rejected them as both foreclosed by this Court’s precedent and meritles.
The Supreme Court hasn’t yet decided whether it will take the case. If they decline, the First Circuit’s ruling in favor of the IRS will remain in effect. On May. 15, Coinbase revealed that hackers bribed their customer support staff in India to access sensitive user information.
