Coinbase Fires Back: Tells Supreme Court IRS Crypto Surveillance Overreach Violated Constitution

Coinbase just dropped a legal grenade in the halls of justice—arguing the IRS’s blanket crypto data grab wasn’t just sloppy, it was unconstitutional.

The dragnet debacle

The exchange claims the tax agency’s 2016 ’John Doe’ summons—demanding records on every user who traded over $20k—was a fishing expedition disguised as tax enforcement. No specific suspicion, just brute-force surveillance.

Why this matters now

With the case finally hitting SCOTUS, a ruling could redefine how regulators access crypto transaction data—and whether ’because we said so’ still counts as legal rationale. Spoiler: the IRS budget office already spent the imaginary $1B in recovered taxes.

Supreme Court should redefine privacy protections: Coinbase

In its brief to the Supreme Court, Coinbase argued that this doctrine is outdated, especially when it comes to crypto transactions. Notably, Coinbase believes that crypto exchanges are more similar to platforms than crypto custodians. Instead of broad searches, the IRS should have probable cause when it comes to requesting information.

“The John Doe summons that Coinbase resisted and that led to the government’s acquisition of Harper’s personal and financial information was not only unlawful. It was unprecedented in its sweep. The summons targeted 14,355 Americans. The IRS did not have particularized reasonable suspicion that a single one of them was evading his or her tax obligations,” Coinbase

The Supreme Court is the highest court in the U.S. and one that has unparalleled influence on the legal system. Any ruling it makes automatically becomes legal precedent, and both the courts and the executive branch have to abide by it.

If the Supreme Court sides against the IRS in this case, its ruling would fundamentally change the government’s powers when it comes to protecting user privacy.