Coinbase Fights IRS Overreach in Supreme Court Showdown—Your Crypto Privacy at Stake
Coinbase just drew a line in the sand. The exchange is urging the Supreme Court to block the IRS from vacuuming up user crypto data—calling it an unconstitutional privacy violation. This isn’t just about taxes; it’s a battle for the soul of financial autonomy in the digital age.
Why it matters: If the IRS gets its way, every altcoin trade, DeFi yield play, and NFT flip could land on a government spreadsheet. So much for ’your keys, your crypto’ when Big Brother wants receipts.
The cynical take: Meanwhile, Wall Street whales still park billions in offshore accounts—but sure, let’s harass the guy stacking SATs. Priorities, right?
Coinbase challenges IRS surveillance reach
In a December, the crypto firm revealed that it received 10,707 requests from law enforcement and federal agencies in 2024, most of which came from the US.
Coinbase stated in the same report 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, the firm 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.
Blockchain privacy at risk
According to the brief, 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.
