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Anonymous Coinbase Users Sued the IRS (and won!)

Shakedown Street

Back in January, the IRS sent a broad, sweeping summons ordering Coinbase to hand over information on all of its U.S. customers. Thanks to a couple of anonymous heroes, the IRS is now scaling back those demands - but not eliminating them completely.

Ever since receiving the summons in January, Coinbase has been in talks with the IRS about its demands. The company said that it was seeking the best way to cooperate while protecting customers' privacy. The IRS demands included getting the account passwords and security settings for all of the company's customers within the target time period.

The unusually broad and invasive summons even received a stern letter of disapproval from members of Congress. Asserting their "exclusive jurisdiction over federal revenue matters", the legislators accused the IRS of overstepping its authority:

"...we strongly question whether the IRS has actually established a reasonable basis to support the mass production of records for half of a million people, the vast majority of whom appear to not be conducting the volume of transactions needed to report them to the IRS. Based on the information before us, this summons seems overly broad, extremely burdensome, and highly intrusive to a large population of individuals."

The letter asked the agency to explain its actions (by June 6).

As of July 11, the IRS has not responded.

John Doe to the Rescue

I like to think Coinbase is being honest about working to protect the interests of its customers, but so far the only legal challenge has been mounted by two John Doe account holders who hired an attorney to prevent the intrusion. Coinbase has said it plans to file its own objection, but they must be waiting for just the right moment because so far they have not done so.

Users who filed the 'Motion to Intervene to Quash Summons' chose to remain anonymous.

The IRS was specifically interested in the period from Ja...

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