Coinbase Challenges IRS Data Demands At US Supreme Court

by Erica Kollmann Benzinga Staff Writer

Zinger Key Points

The case focuses on the IRS’s use of a “John Doe” summons to demand transaction data from Coinbase about thousands of users.
It could reshape how digital data is protected under the U.S. Constitution.
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Coinbase Global, Inc. COIN, the largest U.S. crypto exchange, asked the U.S. Supreme Court on Wednesday to hear a case that could restrict the IRS's ability to monitor crypto transactions on exchanges and other platforms.

The Details: The case, Harper v. O'Donnell, centers on the IRS's use of a "John Doe" summons to demand transaction data from Coinbase about thousands of users, even if they weren't suspected of wrongdoing.Coinbase, along with several states and privacy groups, filed an amicus brief arguing that the government's sweeping data requests threaten Americans' digital privacy.

The company challenged the longstanding "third-party doctrine," which says people lose privacy rights over information shared with companies like banks or crypto exchanges. Coinbase argued that the doctrine is outdated for the digital age, where sharing data with third parties is routine and often necessary.

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The company also warned that letting the IRS collect such data without a warrant allows near-total surveillance of users' financial activity and likened it to a "financial ankle monitor." Coinbase urged the Court to clarify that the Fourth Amendment should protect digital financial records and that users do not forfeit the right to privacy simply by using online platforms.

Why It Matters: If the Supreme Court agrees to hear the case and rules in favor of privacy advocates, it could reshape how digital data is protected under the Constitution and force changes in how both government agencies and private companies handle user information.

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