Coinbase Users Ask Federal Court to Block IRS Bitcoin Subpoenas

A customer of bitcoin exchange Coinbase has filed a motion in federal court in San Francisco seeking to block the Internal Revenue Service (IRS) from obtaining bitcoin users’ transaction records.

According to a new application filed on December 13, Los Angeles attorney Jeffrey Berns questioned the legality of the IRS's acquisition of two years of Coinbase users' transaction records. The IRS began issuing a 'John Doe' subpoena to the Coinbase exchange last month, and it was approved by US Judge Jacqueline Scott Corley on November 30.

Berns asked the court to overturn the approval or impose a protective order to stop the stalking. He called the IRS's John Doe subpoenas an abuse and accused the agency of making "overbroad" document requests.

Berns’ lawyer argued that the application was not intended to evade tax investigation, writing:

“Rather, this request is intended to protect all Coinbase customers from this ‘unwarranted’ subpoena, even though the IRS has not yet identified any individual as being involved in suspected tax avoidance.”

In an interview with CoinDesk, a representative for Berns said that application documents supporting Coinbase users will ultimately be reviewed by the IRS.

“While Coinbase has a business interest in protecting the privacy of its customers’ information, it also does not want to conflict with government regulators,” the company said.

"We are all aware of the IRS proposal Jeffrey K. Berns filed with the court today. We are following all proceedings and look forward to speaking with the IRS," the company said in a statement. "We will update our clients on any significant developments in this matter."