Legal Issues

by Mike Masnick


Filed Under:
bitcoin, cryptocurrency, data, doj, irs, privacy, taxes

Companies:
coinbase



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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  • identicon
    Anonymous Coward, 2 Dec 2016 @ 4:51pm

    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.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 2 Dec 2016 @ 4:53pm

      Re:

      I expect it to survive and would be shocked if it does not.

      Not a single shred of the US Constitution stands as we are 100% at the mercy of how much "rights" the government wants to allow us to have.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 3 Dec 2016 @ 3:40pm

      Re:

      Wasn't Megaupload shutdown because of an Ex Parte order without the defense being present?

      reply to this | link to this | view in chronology ]

  • identicon
    PRMan, 2 Dec 2016 @ 5:06pm

    IRS

    The IRS *already* forces all financial institutions to send them all their records every year, regardless of guilt or innocence.

    I appreciate Coinbase standing up for their users' rights, but why not complain about BofA or ADP, who already turn over everything.

    reply to this | link to this | view in chronology ]

  • icon
    Nick (profile), 2 Dec 2016 @ 7:59pm

    If this becomes a thing, can they also apply the same reasoning to every financial institution? If a bank / offshore tax shelter / company is used to hide tax money, can we have the government demand and get all personal information on all clients of said company/bank/shelter?

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 2 Dec 2016 @ 10:08pm

    Judge Jacqueline Scott Corley is despicable.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Dec 2016 @ 12:30am

    Crypto currencies benefit the boss gangsters of the world far more than anyone else. It is only to be expected that the US executive branch sees itself as the owner. They would already have all of the data via NSLs.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 3 Dec 2016 @ 6:57am

      Re:

      Interesting - if the irs were going after tax cheats and money laundering why have they not ..... oh wait a sec - oh yeah, they only go after the little guys. Never mind.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Dec 2016 @ 4:10am

    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.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Dec 2016 @ 8:41am

    All your base are belong to US

    someone had to say it

    reply to this | link to this | view in chronology ]

  • icon
    Padpaw (profile), 3 Dec 2016 @ 3:32pm

    Now comes the stories about the various government agencies stealing users money. Once they have the info they have shown they are more than willing to rob citizens of their cash.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Dec 2016 @ 7:09pm

    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.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 4 Dec 2016 @ 1:08am

      Re: Money laundering is an easy activity as long as

      Such a simple idea has another disadvantage, it would make the rich pay more tax that the poor, and the politicians are amongst the rich.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 4 Dec 2016 @ 2:43am

        Re: Re: Money laundering is an easy activity as long as

        It would also require a non-corrupt government to administer it, so, yeah...

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 4 Dec 2016 @ 5:32am

    Bitcoin changing the world, one step at a time.

    reply to this | link to this | view in chronology ]

  • icon
    Mason Wheeler (profile), 4 Dec 2016 @ 3:52pm

    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.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 4 Dec 2016 @ 8:30pm

      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.

      reply to this | link to this | view in chronology ]

  • identicon
    John Cressman, 5 Dec 2016 @ 5:33am

    But think of the Children!

    But think of the children...

    Terror...

    Um... is there some other kneejerk, rubber stamp excuse I'm missing?

    See,Trump was right on one thing... it's a rigged system.

    reply to this | link to this | view in chronology ]


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