U.S. v. Coinbase: Virtual Currency Holders Not Outside the IRS’s Reach

December 08, 2017

The U.S. District Court for the Northern District of California, on November 28, 2017, ordered the international digital currency broker, Coinbase, Inc., to produce to the Internal Revenue Service (IRS) the records of Coinbase’s account holders, in connection with the IRS’s investigation of allegedly underreported virtual currency gains. As discussed below, after Coinbase refused to comply with the IRS’s initial summons to obtain information, the IRS issued a second summons with a significant reduction in the type and amount of information requested; pursuant to the order, the court even further narrowed the types of information to which the IRS would be entitled. The court’s decision raises the issue of balancing the privacy interests of virtual currency account holders with the IRS’s legitimate interest in investigating potential tax evasion and brings virtual currencies further into the regulatory scope of U.S. government agencies.

Read “U.S. v. Coinbase: Virtual Currency Holders Not Outside the IRS’s Reach.”