- On Wednesday, a court ordered Coinbase to hand over information to the Internal Revenue Service (IRS) about users that made transactions over $US20,000 between 2013 and 2015.
- That request includes information on 14,355 Coinbase customers across 8.9 million transactions, according to the court order.
- The order comes nearly a year after the IRS first requested records on all of Coinbase’s transactions between 2013 and 2015 as part of its efforts to catch tax evaders.
Just hours after wild fluctuations in bitcoin prices put Coinbase’s servers on the fritz, the cryptocurrency exchange is facing a new challenge: the US government.
Coinbase must turn over information about thousands of its users to the Internal Revenue Service (IRS), a US district court ruled on Wednesday.
As one of the leading exchanges for cryptocurrencies like bitcoin and ether, Coinbase has seen billions of dollars exchanged on its platform- some of which the IRS believes is not being accurately reported by taxpayers.
The court order requires Coinbase to hand over info on all customers who made a transaction worth $US20,000 or more between 2013 and 2015. Coinbase has estimated that this request would total 8.9 million transactions between 14,355 different account holders, according to the court order.
Among the information requested are the names, birth dates, addresses, tax IDs, transaction logs and account invoices of the Coinbase users.
That sounds like a lot of information but it’s actually a major narrowing from the IRS’s initial summons in November 2016, which sought information about every single transaction on the exchange during the period. Coinbase argued that this was an invasion of its customers’ privacy. The company initially ignored the request, before the IRS filed a petition to enforce the summons in March of this year.
An “unprecedented victory for the industry”
A blog post from Coinbase Wednesday celebrated the ruling as a partial success, calling it an “unprecedented victory for the industry.”
“The government’s own lawyers noted at the hearing that the IRS is not accustomed to having to fight for records in this context, and most companies just turn records over without going to court,” David Farmer, director of business operations at Coinbase, wrote in the blog.
Farmer wrote that the final number of people whose records were ordered on Wednesday is 97% lower than when the IRS first requested information.
Despite the celebration, Farmer suggested in the blog that Coinbase may not obey the request, or may challenge the order further. “In the event that we ultimately produce the documents under this Court order, we intend to notify impacted users in advance of any disclosure,” Farmer wrote.
Wednesday’s court order denied Coinbase’s request for an “evidentiary hearing,” which Coinbase could have used to argue that the IRS showed bad faith in requesting the documents it asked for.