Coinbase Obtains Partial Victory Over IRS

Coinbase appeared in federal court this month in the continued fight with the IRS over our customers’ privacy. You can read more in this blog.

We are pleased to say Coinbase won a partial victory in court today. Although the Court did not completely quash the government summons compelling disclosure of certain customers’ records from the period 2013–2015 as we requested, we were proud to accomplish two important victories for our customers.

First, the government vastly narrowed the scope of its summons. The government’s own lawyers noted at the hearing that the IRS is not accustomed to having to fight for records in this context, and most companies just turn records over without going to court. Thanks to Coinbase’s efforts, more than 480,000 customers’ records were preserved from disclosure. This is a 97% reduction in the number of customers impacted by this summons.

Second, the quantity of data we must produce for the approximately 14,000 customers who remain in scope has been significantly reduced. In narrowing the scope of the summons, we are pleased that the Court acknowledged the privacy rights at stake in this matter.

Coinbase started this process more than 12 months ago, and while today’s result is not the complete victory we hoped for, it does represent a substantial and unprecedented victory for the industry and the hundreds of thousands of customers that would have been unfairly targeted if it weren’t for our action. Although we are disappointed not to be able to entirely defeat the summons, we are proud to fight for our customers and in the result we were able to achieve as a small company against a large government agency.

Coinbase is in the process of reviewing the order. As we proceed, we will continue to keep our customers updated. Coinbase has millions of customers and the narrowed summons affects approximately 14,000 of the highest-transacting customers from 2 to 4 years ago. This represents less than 1% of our customer base. In the event that we ultimately produce the documents under this Court order, we intend to notify impacted users in advance of any disclosure.