IRS Adamant on Seeking Access to Bitcoin User Data in Coinbase Case

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A “John Doe” summon is an order that does not specifically identify the person but rather identifies a person or ascertainable group or class by their activities.

A Coinbase customer had filed a motion earlier this month seeking to block the Internal Revenue Service (IRS) from issuing a “John Doe” summons to the Bitcoin exchange. The IRS has now responded to the motion by asking the court to dismiss it and to allow the tax agency to proceed with its summons. The IRS response was filed on December 27, 2016.

A “John Doe” summon is an order that does not specifically identify the person but rather identifies a person or ascertainable group or class by their activities. And in November, a formal request was filed by the IRS to serve a “John Doe” summons on all United States-based Coinbase customers who transferred convertible virtual currency from 2013 to 2015.

The request was granted by Judge Jacqueline Scott Corley after he found a reasonable basis for believing that certain internal revenue laws were flouted and the information sought was not readily available from other sources.

Coinbase is a company which facilitates transactions of digital currencies like Bitcoin and Ethereum. Jeffrey K. Berns, a Coinbase customer, responded by filing a motion to set aside the ruling which would prevent the summons from being issued.

He did so as an “intervenor” meaning that he was asking the court to allow him to participate in the legal process even though he had not been specifically named in the original summons.

Berns’ arguments were based on his concerns regarding the exposure of private customer data to hackers. He also raised his concerns regarding the effect of the summons on the entire blockchain technology industry.

In turn, the IRS reiterated the objective behind the summons, which was “to produce information revealing the identity of certain unknown taxpayers.” And since Berns outed himself as a Coinbase user, he is no longer the subject of the summons or related to the matter, and the issue as it affects Berns has been resolved. Therefore, making his motion invalid.

With that, the IRS wants to proceed with issuing the “John Doe” summons on Coinbase customers.

While Berns is still undecided about his future course of action, Coinbase stands firm in its opposition to IRS efforts to access customer data. Coinbase had outlined in a previous statement  that while it is their practice “to cooperate with properly targeted law enforcement inquiries,” the company is “extremely concerned with the indiscriminate breadth of the government’s request.”

Source:NewsBTC