Coinbase Takes on the IRS: The Supreme Court Has to Decide If Privacy is Just a Myth

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In what could only be described as a spectacularly odd turn of events, Coinbase has thrown its proverbial hat into the legal ring, filing an amicus brief in a U.S. Supreme Court case involving crypto and the IRS’s apparent inability to grasp the concept of privacy.

On April 30, Coinbase decided it was high time to speak up, as they waded into the Harper vs IRS case, arguing that the Internal Revenue Service’s handling of user crypto data was, to put it politely, a bit much. They’re advocating for better privacy protections—because apparently, the IRS thinks it can go around digging through your digital wallet like it’s a yard sale.

Now, let’s rewind to 2016, when the IRS sent a very polite request (read: demand) for data on 14,000 Coinbase customers. The goal? To sniff out any tax evasion. The IRS leaned on the third-party doctrine, which essentially says that once you’ve shared your data with anyone—like a crypto exchange, for instance—you’ve officially forfeited all rights to privacy. Naturally, James Harper, a diligent Bitcoin researcher, was not amused and took the IRS to court in 2020. His accusation? That the agency had stepped way beyond its boundaries.

The Supreme Court Should Redefine Privacy (Because The IRS Clearly Hasn’t Gotten the Memo): Coinbase

Coinbase’s amicus brief is simple: the third-party doctrine is so 2007. It’s downright outdated, especially in the crypto age. According to Coinbase, crypto exchanges aren’t the custodians of your digital fortune—they’re more like a cafĂ© where you leave your stuff while you go grab a coffee. The IRS shouldn’t just be able to barge in and search everything; they should need a little more than a hunch and a “gut feeling” before digging through your transactions.

“The John Doe summons that Coinbase resisted and that led to the government’s acquisition of Harper’s personal and financial information was not only unlawful. It was unprecedented in its sweep. The summons targeted 14,355 Americans. The IRS did not have particularized reasonable suspicion that a single one of them was evading his or her tax obligations,” Coinbase

Now, just in case you didn’t know, the Supreme Court is kind of a big deal. It’s the highest court in the land and makes decisions that ripple through the legal system like a rock in a pond—except the rock is a giant ruling and the pond is everyone who has to follow it. If the Court sides with Coinbase, the IRS’s ability to invade your financial privacy could get a very rude awakening.

And let’s be real: If the IRS loses, it might actually be a win for privacy. Who knew that a crypto exchange would be the defender of our rights to keep our wallets (digital or otherwise) a little more… well, private?

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2025-04-30 23:26