Coinbase Users Get Bad News From Court—Are You Safe On Coinbase?
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May 31, 2023 9:52 am
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Coinbase users, and by extension all centralized crypto exchanges, recently got some bad news. …
According to a recent court ruling, the IRS does have the right to request sensitive user data from the exchange and to access those files.
The lawsuit was originally filed in 2020 by James Harper against the IRS Commissioner and select members of the IRS.
Investors, speculators, and other crypto news outlets were dismayed by the recent ruling and its broader implications for the entire crypto industry.
Judge rules IRS can access your #crypto records on third-party exchanges 😮 Privacy concerns vs. tax regulation battles continue. Can a balance ever be struck? 🤔💰 $BTC #Coinbasehttps://t.co/jQh5sY5xxy pic.twitter.com/DnUuDfns1f
— Chain Review (@Chain_Review) May 31, 2023
Good Mornin, Fam! 🪷
📰💥 IRS triumphs! Judge upholds their authority over Coinbase user data. 🧾 Privacy battles heat up in the crypto world. Are your crypto transactions truly private? 🕵️♂️💭 Stay informed, protect your privacy, and trade wisely!
More 👇 pic.twitter.com/kWB9RwjdlR— theSPY007 🪷 (@ThaSPY007) May 31, 2023
Blockworks provided more details:
Plaintiff James Harper filed suit in Aug. 2020 against the IRS, its then-commissioner Charles Rettig and 10 IRS agents.
It alleged they had violated his rights to obtain trading records through what’s known as a “John Doe” summons.
John Doe summons — a common tactic used by multiple government agencies — essentially affords the legal right to request a third party hand over data belonging to an individual or group of individuals for tax evasion checks.
One individual explained the dangerous legal precedent that this sets, not only for other exchanges but for Ledger as well, which recently announced plans for a service titled “Ledger Recovery“.
The Ledger Recovery service would effectively open up Ledger to be considered a custodial service by the IRS and other government agencies.
Any records stored as part of that Ledger Recovery system could easily be accessed by the state, explains Chris Blec.
"Coinbase is a bank – this is not a banking service."
"There's no information for the IRS."HE IS LYING.
Ledger Recovery could easily be considered as a custodian by the feds.
And they will absolutely know every clients' balances, transactions, etc.@Ledger, be more honest. https://t.co/eF16rfBLtw
— Chris Blec (@ChrisBlec) May 22, 2023
Bein Crypto concludes:
This landmark ruling may leave a question behind: Does Coinbase report to IRS?
The answer is yes, Coinbase sends Forms 1099-MISC to the IRS for US traders who made more than $600 in crypto rewards or staking. The $600 threshold is the Coinbase IRS reporting threshold for tax year 2022.
Coinbase may issue Form 1099-MISC to the account owner and the IRS if certain qualifying factors are met.
These forms detail taxable income from cryptocurrency transactions but do not report capital gains or losses.
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