Court rules IRS can collect Coinbase user data without warrants

The U.S. Supreme Court has declined to hear an appeal from a Coinbase user, allowing the IRS to access data from the exchange’s users.

The Supreme Court sided with the Internal Revenue Service in a major financial privacy case. On Monday, June 30, the Court declined to hear an appeal from James Harper, a Coinbase user who sued the IRS for what he called unconstitutional overreach.

The decision came without explanation, a common outcome in such cases. Importantly, the Court did not impose any new limitations on how the IRS collects user data. The ruling effectively permits the IRS to access data from more than 14,000 Coinbase users, originally requested in a 2016 summons.

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.