Legal

Motion Filed To Block IRS From Coinbase User Data

New developments in the IRS Coinbase summons.

In mid-November of this year, the IRS sought access to Coinbase’s user records as part of an investigation into alleged tax violations connected to digital currency. It filed a petition in the District Court for the Northern District of California asking for permission to serve a summons to Coinbase. On Nov. 30, the IRS got its wish. Judge Jacqueline Scott Corley sided in favor of the IRS request.

In San Francisco, on Tuesday (Dec. 13), a Coinbase customer filed a motion in federal court seeking to block the IRS from accessing personal, transactional and security data from Coinbase users active on the bitcoin trading and storage platform between Dec. 31, 2013, and Dec. 31, 2015.

The motion was filed on behalf of Los Angeles attorney and Coinbase user Jeffrey K. Berns, who estimated that over a million Americans would be subject to the IRS summons. Berns was quoted as saying: “There is no legitimate reason to seek these records. Individuals with no taxable events shouldn’t be subject to a complete investigation because the IRS doesn’t understand a developing technology.”

Berns’ motion alleges handing over Coinbase data to the IRS would risk exposing the data to hackers given that the IRS was hacked between 2014 and mid-2015. The motion is currently scheduled to be heard on Jan. 19, 2017. Berns has also requested that the court schedule an evidentiary hearing and allow Berns to obtain documents and a deposition from the IRS.

Coinbase previously stated it would oppose government efforts to obtain customer information. The company is the largest virtual currency exchange in the U.S. It is licensed in 34 states, the District of Columbia and Puerto Rico and operates in 32 countries.

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