The US government has urged the Supreme Court not to take up a Coinbase user’s challenge against the Internal Revenue Service’s (IRS) effort to obtain his crypto transaction records.
In a filing dated May 30, Solicitor General D. John Sauer argued that Coinbase user James Harper has no Fourth Amendment right to shield his financial records held by the exchange.
The government claimed that Harper “voluntarily” shared his data with Coinbase, and that the IRS followed proper legal procedures to obtain it through a judicially approved summons.
Harper’s case centers on a 2016 IRS investigation into widespread tax underreporting on cryptocurrency gains. At the time, the IRS discovered a sharp gap between the millions of Coinbase users trading Bitcoin (BTC) and the relatively few taxpayers who reported crypto gains.
In response, the agency obtained a so-called “John Doe” summons compelling Coinbase to turn over records on high-volume customers.
An excerpt of the filing. Source: Supreme Court
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Coinbase user sues IRS over crypto records search
Harper, who traded Bitcoin on Coinbase during the relevant years, later sued, claiming that the IRS’s actions amounted to an unconstitutional search of his personal records.
Lower courts disagreed, ruling that Coinbase’s records are business documents — not Harper’s private papers — and that the IRS acted lawfully.
In its brief, the government argued that Supreme Court precedent supports the IRS’s position. Citing past cases such as United States v. Miller, the government emphasized that individuals have no reasonable expectation of privacy in financial records held by third parties Coinbase.
The filing also pointed to Coinbase’s own privacy policy, which warned users that information could be shared with law enforcement.
“To the extent petitioner made those arguments below, the court of appeals correctly rejected them as both foreclosed by this Court’s precedent and meritless,” the government said.
The Supreme Court has not yet decided whether it will hear the case. A denial would leave in place the First Circuit’s ruling in favor of the IRS.
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Coinbase suffers major data breach
On May 15, Coinbase disclosed a data breach in which attackers bribed customer support staff in India to access sensitive user information.
Stolen data included customer names, account balances, and transaction histories. Coinbase confirmed the breach impacted roughly 1% of its monthly transacting users. Among those affected was venture capitalist Roelof Botha, managing partner at Sequoia Capital.
Coinbase also faced a wave of lawsuits following the revelation. At least six legal complaints were filed on May 15 and 16, with plaintiffs accusing the exchange of failing to implement adequate security measures and mishandling its response to the breach.
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