IRS Granted Legal Authority to Access Coinbase Users’ Trading Data

• A federal court ruled that the IRS has the legal authority to access Coinbase users’ trading data via a “John Doe” summons.
• The suit sought to block the tax authority’s access by arguing that it was a violation of Harper’s Fourth and Fifth Amendment rights.
• The U.S. District Court of New Hampshire said the powers afforded to the IRS by Congress allow it to access any information knowingly shared with a third party.

Court Ruling: IRS Has Right To Access Coinbase Users‘ Trading Data

A federal court ruled that the IRS has the legal right to access Coinbase users‘ trading data through a „John Doe“ summons. The case was filed by James Harper against the IRS in 2020, claiming it violated his Fourth and Fifth Amendment rights. The U.S. District Court of New Hampshire disagreed, saying that these records are akin to financial records at a bank and not protected under constitutional rights, as Congress grants this power to the IRS for any information shared with third parties.

Background on John Doe Summons

A John Doe summons is used when there is no known taxpayer or entity involved in an investigation by the IRS, allowing them to obtain data without knowing who they are looking for specifically. In this case, they issued one in order to investigate potential tax fraud related to cryptocurrency trading activities conducted via Coinbase accounts between 2013 and 2015.

Harper’s Arguments Against The Summons

James Harper argued that he had „a reasonable expectation of privacy“ in his account records at Coinbase and thus had protections from having those records accessed through a John Doe Summons issued by the IRS without first obtaining a warrant from a judge. However, according to Judge Landya McCafferty, she found that Harper did not have any such expectation of privacy due to him voluntarily sharing his information with Coinbase when opening his account there – thereby waiving any right he may have had towards protecting it from being accessed without his consent or knowledge.

Court’s Rejection Of Harper’s Argument

Judge Landya McCafferty rejected Harper’s argument citing established precedents where similar cases were decided in favor of allowing government agencies like the Internal Revenue Service (IRS) access into records held by third parties such as banks or other financial institutions when they are looking for evidence related to criminal activity or fraud investigations – which is why she ultimately found against him in her ruling on May 31st 2023 .

Conclusion In conclusion, US courts have granted legal authority for certain government agencies like the Internal Revenue Service (IRS) access into records held by third parties like banks or other financial institutions when investigating possible criminal activity or fraud-related crimes – including those involving cryptocurrency exchanges such as Coinbase