Supreme Court Greenlights IRS Snooping on Coinbase Users—Here’s What It Means for Crypto Privacy

The US Supreme Court just handed the IRS a master key to Coinbase’s vault—and your transaction history is fair game. Taxman wins, crypto anarchists lose. Again.

Here’s the kicker: No warrants needed. The ruling leans on a dusty 1970s law that treats crypto exchanges like your neighborhood bank. Surprise—regulators love applying old rules to new money.

Privacy advocates? Fuming. Coinbase users? Suddenly Googling ‘off-chain transactions.’ Meanwhile, the IRS quietly updates its ‘how to audit crypto bros’ playbook.

Bonus cynicism: Nothing unites bureaucrats faster than the scent of untaxed Bitcoin profits. Decentralization was fun while it lasted.

Coinbase shared over 14,000 crypto customers’ info with IRS

The United States’ IRS summoned Coinbase Global Inc. to share crypto transaction info for over 14,000 Americans. One of the users argued that the MOVE was a violation of their constitutional rights, however, the court has rejected the petition and IRS enjoys the right to access whatever information is required for crypto transactions through third parties like exchanges. 

While justices did not offer an explanation while turning down the appeal on June 30, the probe began in the year 2016, under Barack Obama’s presidency. The IRS reached out to Coinbase and collected information for over 500,000 customers from Coinbase within a three-year timeframe. 

The exchange attempted to dodge the IRS’ attempt, however after a year-long legal tussle they shared the information. In 2019, the IRS sent James Harper a letter connected to the information obtained from the exchange and informed him that he “may not have properly reported” VIRTUAL currency transactions. 

Harper sued the IRS for wrongfully obtaining the information, and the court extended the 1976 Supreme Court ruling that says the Fourth Amendment does not apply to records held by a third party, like a bank.

Harper argued that, “The lower court’s ruling will effectively strip millions of Americans of meaningful privacy protections over their most sensitive financial data – simply because they use modern financial service providers.”

The court ruling makes it clear that there may not be a free FLOW of information or direct access for Coinbase user data, however the IRS obtains information from the exchange and likely other crypto third parties, as needed, for collecting taxes and verifying virtual currency reporting from users.