Largest Bitcoin exchange
The government’s request was part of a bitcoin tax-evasion probe, and seeks to identify all Coinbase users in the U.S. who “conducted transactions in a convertible virtual currency” from 2013 to 2015. What makes a “John Doe” unique, is that it represents a special "shotgun" form of summons to look for tax evaders that allows the IRS to obtain information about all taxpayers in a group or class of people, even if the agency doesn’t know their identities. The IRS has deployed the tactic in its recent crackdown on undeclared offshore accounts, with the implication that any such broad sweep may lead to prosecution.
Our customers may be aware that the U.S. government filed a civil petition yesterday in federal court seeking disclosure of all Coinbase U.S. customers’ records over a three year period. The government has not alleged any wrongdoing on the part of Coinbase and its petition is predicated on sweeping statements that taxpayers may use virtual currency to evade taxes.
Although Coinbase’s general practice is to cooperate with properly targeted law enforcement inquiries, we are extremely concerned with the indiscriminate breadth of the government’s request. Our customers’ privacy rights are important to us and our legal team is in the process of examining the government’s petition. In its current form, we will oppose the government’s petition in court.
Coinbase head legal counsel, Juan Suarez, said that "we want to work with law enforcement — that's generally our policy, " . "But we can't tolerate sweeping fishing expeditions. We are very concerned about the financial privacy rights of our customers."
We concluded our report by wishing "Good luck to Coinbase fighting the IRS: if America's tax collector is intent on getting the identities of the biggest traders are in America's largest bitcoin exchange, it will certainly succeed (especially if they happen to be conservatives)."