U.S. Supreme Court Rejects Coinbase User’s Privacy Appeal Against IRS

The United States Supreme Court has rejected an appeal from a Coinbase user who revealed that the Internal Revenue Service (IRS) violated his rights under the Constitution’s Fourth Amendment. Certain members of the Court’s conservative wing have criticized the longstanding third-party doctrine, advocating for a legal framework that emphasizes property rights over the data at issue.

Appeals Court Sides with IRS Despite Concerns

According to a Bloomberg report, the case required Coinbase Global Inc. to disclose transactional data for more than 14,000 clients. In a push for digital privacy, Coinbase account holder James Harper has appealed to the Supreme Court to reconsider a 1976 ruling that denied personal privacy rights in bank-held records.

“The lower court’s ruling will effectively strip millions of Americans of meaningful privacy protections over their most sensitive financial data – simply because they use modern financial service providers,” Harper said.

For privacy advocates, the case was seen as a crucial chance to limit government access to personal digital information. Despite privacy concerns, a federal appeals court upheld an IRS summons targeting crypto users as part of a probe into alleged widespread tax evasion.  In addition to third-party access, Justice Neil Gorsuch noted that the involvement of a third party in storing a user’s data or possessions does not erase a claim to privacy or control over it.

Harper Sues IRS, Claims Illegal Data Collection 

Coinbase supported Harper’s petition, urging the Supreme Court to hear the case. The company said it pushed back against the IRS as long as possible without incurring legal trouble. 

Initiated in 2016 under President Barack Obama, the IRS investigation involved a broad request for financial and personal records from approximately 500,000 Coinbase users over a three-year period. After approximately a year of litigation, the platform partially complied, producing a subset of the data that included records about petitioner Harper.

According to the report, the IRD disclosed that it sent a letter to Harper in 2019. The agency claimed that the Coinbase user may not have properly reported crypto-asset transactions. In response, Harper maintained that he had fully complied with his tax obligations and subsequently filed a lawsuit against the IRS, alleging that the agency had unlawfully acquired his financial records. 

Overall, President Donald Trump’s administration pushed for the dismissal of Harper’s appeal, claiming he had no privacy rights in the financial records stored by Coinbase. Meanwhile, the platform has recently assisted U.S. officials in a $225 million seizure linked to a “pig butchering” scam, a large-scale fraud operation.

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