Coinbase user James Harper is now locked in a legal showdown with the Internal Revenue Service (IRS). The argument has focused on the public access to his cryptocurrency trading records. By ruling in favor of the IRS, the Supreme Court has given the agency permission to bypass a warrant and obtain all of Harper’s data. This decision is a big win for privacy advocates, who have contended that this kind of access is unconstitutional.
Harper subsequently filed a lawsuit to prevent the IRS from obtaining his Coinbase trading history. He claims that this access constitutes an unlawful search and seizure, thereby violating his Fourth Amendment right to privacy. He made an impassioned case against the IRS having any door into his financial data. He told them they needed to show probable cause and get a warrant in advance.
Shockingly, all of these lower courts ruled against Harper. Coinbase’s argument was that the data at issue was property of Coinbase, the cryptocurrency exchange platform, and not property of Harper. This view is consistent with the government’s position that cites to the effect to the United States v. Miller case.
The United States v. Miller case set an important hallmark precedent. It ruled that people have no expectation of privacy in their financial information held by third parties. This legal precedent has been the lynchpin of the government’s defense in the Harper case.
The Supreme Court’s ignominious decision has gotten a lot of chatter on legal twitter and beyond. These millions of users are speaking loudly against the government’s overreach into their digital privacy.
"We believe in tax compliance, but this goes far beyond a narrow and tailored request and far beyond crypto. This applies to banks, phone companies, ISPs, email, you name it. [...] you should have the same right to privacy for your inbox or account as you have for a letter in your mailbox." - Paul Grewal, Coinbase Chief Legal Officer.
As Chief Legal Officer of Coinbase, Paul Grewal has been a very public and vocal advocate for data privacy. We’re thankful for his statement on the ruling, and on the broader implications of this ruling. It applies beyond cryptocurrency to nearly every type of digital communication and digital transaction.
Today’s ruling is a significant reaffirmation of the power investorgate to U.S. regulatory agencies to gain access to user data from crypto exchanges. The case will undoubtedly shape the emerging discussion surrounding digital privacy and banking going forward.
