Coinbase Challenges IRS Data Collection in Supreme Court

Coinbase has taken a significant step in advocating for user privacy by filing an amicus brief with the US Supreme Court. The brief supports a constitutional challenge to the Internal Revenue Service’s (IRS) broad collection of cryptocurrency user data, arguing that it violates Fourth Amendment protections. The filing, submitted on April 30, outlines Coinbase’s opposition to an IRS John Doe summons that compelled the disclosure of detailed financial and identity records for over 14,000 customers without individualized suspicion.

The brief supports petitioner James Harper, whose financial data was obtained by the IRS after issuing a sweeping 2016 summons to Coinbase seeking information on approximately 500,000 users. Coinbase initially resisted the request, citing user privacy protections, but ultimately complied after a federal court ordered it to produce data on a smaller subset of users linked to 8.9 million transactions over a three-year period. The summons enabled the IRS to connect pseudonymous blockchain wallet addresses to real-world identities, a move Coinbase argues permits unchecked, indefinite surveillance of users’ crypto transactions.

Coinbase chief legal officer Paul Grewal commented on the filing, stating that the third-party doctrine, which considers that individuals forfeit their reasonable expectation of privacy when they voluntarily disclose information to third parties, needs to be re-evaluated. Grewal emphasized that while Coinbase supports tax compliance, the IRS request goes far beyond a narrow and tailored request and beyond crypto. He further said that this doctrine’s overreach can be painful and that users should have the same right to privacy for their inbox or account as they have for a letter in their mailbox.

In a December report, Coinbase revealed that it received 10,707 requests from law enforcement and federal agencies in 2024, most of which came from the US. The company stated that its goal is to narrow overly broad or vague requests and provide data that the IRS cannot use to individualize customer details. In the filing, Coinbase reiterates that it cooperates with lawful government requests but draws the line at bulk data collection without cause. The brief recounts the company’s legal attempts to block the summons, its refusal to comply voluntarily, and the arguments made during enforcement proceedings.

According to the filing, Coinbase described the IRS’s action as an overreach that could let the agency “target anybody” and “rummage through” user data. The brief notes that despite narrowing the original summons, it still resulted in the IRS acquiring information such as names, taxpayer identification numbers, transaction logs, and data from counterparties. The company complied only after being compelled by a court order under threat of contempt.

The brief argues that the IRS’ ability to link a person’s identity to blockchain wallet addresses undermines the privacy model of pseudonymized crypto transactions. Once the agency establishes this link, it can trace historical and future transactions with minimal effort. Coinbase argued that law enforcement can use this data to build a continuous, real-time profile of users’ blockchain activity, even beyond transactions conducted on the exchange. The brief further stated that the First Circuit misapplied the third-party doctrine by failing to account for differences in scale, intrusiveness, and duration of the IRS’s actions compared to historical precedent.

Coinbase calls on the Supreme Court to reinforce limitations outlined in Carpenter v. United States, which restricted warrantless access to cell phone location data and emphasized the need for updated interpretations of Fourth Amendment protections in the digital era. The company warns that if the decision is left unchecked, it will establish a precedent allowing government agencies to access vast troves of user data from digital platforms without warrants or particularized suspicion. Coinbase concludes by urging the Supreme Court to grant certiorari and clarify that bulk acquisition of sensitive personal and financial data from crypto service providers must comply with constitutional standards.