Emre Yumlu 
The United States government has argued that the Supreme Court should reject a case brought by a Coinbase user who attempted to block the transfer of his cryptocurrency transaction data to the Internal Revenue Service (IRS).
In a document dated May 30, U.S. Solicitor General D. John Sauer stated that James Harper, a Coinbase user, does not have a constitutional right to hide his crypto transaction records. The government noted that Harper had “voluntarily” shared his information with Coinbase and that the IRS followed a legal process by obtaining the data through a court-approved summons.
Harper’s case is tied to an IRS investigation launched in 2016. At that time, the agency observed that millions of users were conducting Bitcoin transactions through Coinbase, while only a small number were reporting those gains on their tax returns. As a result, the IRS issued a “John Doe” summons to access the data of high-volume users.
Coinbase User Filed a Lawsuit Against the IRS
Harper claimed he traded Bitcoin via Coinbase during the relevant years and argued that the IRS’s data collection constituted an unconstitutional search of his personal information. However, lower courts ruled that the records in question were business documents of Coinbase, not Harper’s private data, and confirmed that the IRS acted within the law.
In its submission to the Supreme Court, the government referenced prior cases to support its stance. Specifically, it cited the United States v. Miller decision, stating that individuals do not have a reasonable expectation of privacy regarding financial information held by third parties. Additionally, it pointed to Coinbase’s privacy policy, which clearly warns users that data may be shared with legal authorities if necessary.
The document stated, “The appeals court rightly rejected these arguments as inconsistent with Supreme Court precedent and lacking merit.”
The Supreme Court has not yet decided whether it will hear the case. If the request is denied, the ruling by the First Circuit Court in favor of the IRS will stand.
Coinbase Hit by Data Breach
On May 15, Coinbase revealed that some customer support staff in India were bribed to leak user data. The breach exposed sensitive details, including customer names, account balances, and transaction histories. The company reported that approximately 1% of its monthly active users were affected. Among them was Roelof Botha, managing partner at Sequoia Capital.
Following the breach, multiple lawsuits were filed against Coinbase. At least six separate complaints were submitted on May 15 and 16, accusing the exchange of inadequate security measures and poor incident response.
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