Court Rubber Stamps IRS's Demand To Get All Coinbase User Data

from the um... dept

A couple weeks back, we wrote about a ridiculous and massively overbroad demand from the IRS that virtual currency exchange/online wallet host Coinbase turn over basically all info on basically all Coinbase users. They did this because they saw evidence of a single person using Bitcoin to avoid paying taxes. Coinbase expressed concern over this, but Judge Jacqueline Scott Corley didn’t seem too concerned, and has granted the IRS’s request by literally rubber stamping the DOJ’s request. I know it’s not all that uncommon for judges to accept “proposed orders” but it’s still a bit disturbing to see it happen on something with potentially massive consequences.

Coinbase has indicated that they’re going to push back on this legally, but it’s still quite unfortunate that the judge didn’t seem all that concerned about this. While Coinbase says it expected the court to grant this order, and that “we look forward to opposing the DOJ’s request in court,” it’s unfortunate how quick judges are to agree to these kinds of orders. Either way, this is going to be a case to follow.

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Companies: coinbase

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Comments on “Court Rubber Stamps IRS's Demand To Get All Coinbase User Data”

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Anonymous Coward says:

The only problem is that this order will never survive a court challenge. Except the federal appellate courts to kick this back down to the lower courts faster than flies on shit.

Coinbase was never allowed to argue against the order and it done all in ex parte fashion, which is a series violation of Coinbase’s due process rights.

If this survives a challenge, I would be very surprised and shocked at this violation of someone’s legal rights to due process. It’s akin to holding a trial against a defendant without allowing that defendant to confront his or her accusers.

Anonymous Coward says:

No, if this ruling stands, then expect it to carry over into criminal trials where any defendant accused of any crime isn’t allowed to participate in the trial, not even his (defense) attorney. This is what the government has been crying for all along, to have trials where a defendant isn’t allowed to defend him or herself.

Once you give government certain powers, they are reluctant to give them back and this definitely sets a very bad and dangerous precedent.

Simply put, ex-parte discussions with a judge without the opposing attorney is simply a serious violation of jurisprudence. Most federal appellate courts toss out ex-parte rulings because they seriously undermine the defense of someone accused of a crime.

There are certain types of decisions that can be overturned but this particular decision in this case involving Coinbase, it’s going to be hard for the federal courts to uphold this order from this idiot judge.

Anonymous Coward says:

Money laundering is an easy activity as long as

you pay your tax.

Only the stupid get caught when laundering money. There are so many legitimate ways of laundering successfully. As long as there are no discrepancies between taxable income, valid expenses and tax paid, one will never be investigated.

The problem is that the entities doing the laundering don’t feel comfortable paying tax to a government, though they are more than happy to pay others an appropriate rate of taxation.

Whenever a government looks for money laundering, they miss the boat on the majority of it.

At one time, there was an estimate that for every $1 legitimately in the financial system, there was $1000 that was from illegal/criminal activities flowing through the same system.

A suggestion was made to remove all taxes and other government charges and just charge $0.01 per $100 for each financial transaction passing through the various banking systems. The estimate was that the governments would make more money from such a scheme than they currently do via income and other taxes.

Of course, such a simple idea is beyond the ability of any government to actually undertake.

Mason Wheeler (profile) says:

It feels like I’m saying this a lot lately, but anyone surprised by this is simply not paying attention. This is exactly what people who understand money have been predicting for years now. Bitcoin is a scam, built on one fraud after another from the very beginning (remember Mt. Gox?) and no government is going to put up with untraceable, untaxable "currency" undermining their economy. (Particularly not one that’s been so badly mismanaged that it ended up under de facto control of a group of Chinese hackers!)

I would call this move a warning shot, but honestly it feels more like a full-out opening salvo. If, for any reason, you own Bitcoin, you’d do well to sell now and leave someone dumber than you holding the bag.

Anonymous Coward says:

Re: Re:

The same can be said for the US Dollar (or for that matter any other fiat currency in existence). The mighty US Dollar is no less a fraud than Bitcoin. It is backed by nothing, has no intrinsic value and is openly controlled by a group of criminal bankers.

So to quote you, you’d do well to sell “your US Dollars” now and leave someone dumber than you holding the bag.

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