Breaking: Court Greenlights IRS Warrantless Access to Coinbase User Data—Privacy Advocates Sound Alarm

The IRS just scored a major win in its crypto crackdown—no warrant needed. A federal court ruled the tax agency can force Coinbase to hand over user transaction histories, sparking immediate backlash from privacy advocates.

Here’s what you need to know:

The fine print: Judges sided with the IRS’s claim that crypto exchanges aren’t entitled to the same privacy protections as traditional banks. The decision could set a dangerous precedent for financial surveillance.

DeFi’s nightmare scenario: While centralized exchanges like Coinbase must comply, the ruling adds fuel to decentralization maximalists’ arguments. ‘Not your keys, not your crypto’ never sounded more prophetic.

Tax man cometh: The IRS clearly isn’t messing around—they’ve been ramping up crypto enforcement since 2021. This latest move suggests they’re doubling down despite the bear market.

One cynical take? Traditional finance gets bailouts while crypto gets audits. Some ‘level playing field.’

CEX users not entitled to privacy: U.S. Courts

Harper appealed to the Supreme Court on the grounds that the IRS’s sweeping data demands violated his Fourth Amendment protections. Specifically, the 2016 summons sought data on all Coinbase users who might have misreported crypto income.

In a 2020 lawsuit, Harper claimed the request constituted an unreasonable search and seizure. However, both the District and Appeals Courts ruled in favor of the IRS, citing the third-party doctrine. The courts argued that individuals have no reasonable expectation of privacy when voluntarily submitting data to third-party services.

With the Supreme Court declining to hear the case, Harper exhausted his final legal avenue. The outcome reaffirms the IRS’s authority to obtain user data from centralized crypto exchanges without needing individualized warrants.

The implications extend beyond crypto. Legal experts warn that the decision may further normalize broad surveillance powers across financial and tech platforms, setting a precedent for expansive government access to user data.