Coinbase has filed a brief with the US Supreme Court in a case dating back to 2016, in which the Internal Revenue Service sought to obtain data on hundreds of thousands of its customers, arguing that the court should 'safeguard the privacy interests of Americans in digitally stored information held by third-party service providers.' The IRS had requested financial records under the premise that individuals' transaction records become accessible once they share their information with a third party, in this instance, Coinbase. The exchange has fought to limit the scope of the request through the courts and was eventually compelled to provide a significantly narrower set of data. In its amicus brief filed on Wednesday, Coinbase contended that 'the court should intervene to clarify that the third-party doctrine does not permit the IRS to conduct indiscriminate searches.' The case, which has significant implications for privacy, originated in 2020 when one of the customers, James Harper, a Bitcoin researcher, filed a lawsuit against the IRS, alleging improper overreach in its demand for records. Harper, a lawyer and fellow at the American Enterprise Institute, has now taken his argument to the high court.
Coinbase noted that 'user anonymity is compromised and the blockchain becomes vulnerable to surveillance when the government obtains information that links a public key or wallet address to a user's identity.' The company argued that 'this John Doe summons infringed upon a sphere in which over 14,000 Americans had a reasonable expectation of privacy against a warrantless IRS search for extensive personal and financial information.' The Department of Justice, representing the government's case, had previously argued that 'an individual lacks a reasonable expectation of privacy in information voluntarily provided to a third party, including bank records.'