Market News

US Government Urges Court to Dismiss Coinbase User's Crypto Data Challenge

The US government has pressed the Supreme Court to decline hearing a Coinbase user's objection to the IRS's demand for his crypto transaction records.

In its filing, the government contended that James Harper, the Coinbase user, has no constitutional right to shield data shared with the exchange.

Solicitor General D. John Sauer argued that Harper voluntarily provided his information to Coinbase and that the IRS's actions were legally sound.

The dispute arises from a 2016 investigation into significant tax underreporting related to cryptocurrency gains, uncovering a vast disparity between trades and reported earnings.

To address this issue, the IRS employed a "John Doe" summons to acquire records from Coinbase concerning high-volume traders.

Harper later filed a lawsuit claiming this inquiry constituted an unlawful search of his private records, a stance which lower courts rejected.

They ruled that such records are considered business documents, not private papers subject to Fourth Amendment protections.

In its brief, the government referenced Supreme Court cases supporting the idea that individuals should not have privacy expectations concerning records held by third parties, such as Coinbase.

While the Supreme Court has yet to decide on the case, a refusal to hear it would uphold the lower court's ruling in favor of the IRS.

As this legal battle unfolds, it highlights ongoing tensions between privacy rights and governmental transparency in the cryptocurrency sector.