A federal judge in the Northern District of California issued a ruling today that granted the Internal Revenue Service (IRS) the authority to demand digital currency user information from the Coinbase exchange. The IRS request for court approval of the so-called “John Doe” summons was presented to the court earlier in November by the Department of Justice to meet statutory guidelines that require court approval for any summons that fails to identify that targeted person or persons by name. The summons seeks information about Coinbase’s US customers who executed digital currency transactions between 2013 and 2015.
In her ruling, Judge Jacqueline Scott Corley declared that “Based upon a review of the Petition and supporting documents, the Court has determined that the “John Doe” summons to Coinbase, Inc. relates to the investigation of an ascertainable group or class of persons, that there is a reasonable basis for believing that such group or class of persons has failed or may have failed to comply with any provision of any internal revenue laws, and that the information sought to be obtained from the examination of the records or testimony (and the identities of the persons with respect to whose liability the summons is issued) are not readily available from other sources.”
Court documents have indicated that the IRS action was initiated in response to the agency’s alleged discovery of tax evasion by customers of the Coinbase exchange. The IRS has not made any allegations with respect to malfeasance on the part of the exchange. Coinbase has indicated that it will continue to stand in opposition to the request, and will resist the subpoena in court. In a statement, exchange representatives once again noted that “we remain concerned with our U.S. customers’ legitimate privacy rights in the face of the government’s sweeping request.”