A legal battle for digital privacy is being brought to the highest court by Coinbase, with an appeal made to the Supreme Court for the dismantling of broad surveillance powers that are viewed as a threat to the future of cryptocurrency freedom.
An amicus brief was disclosed by crypto exchange Coinbase (Nasdaq: COIN) on April 30, having been submitted to the U.S. Supreme Court to urge the justices to consider the case of Harper v. O’Donnell, which contests the Internal Revenue Service’s large-scale data gathering from the cryptocurrency platform.
It was explained by Coinbase that the origins of this case trace back to the issuance of an extensive John Doe summons by the Internal Revenue Service, demanding the disclosure of personal and financial records for more than 500,000 users who had conducted millions of transactions over a span of three years. The amicus brief contends that the deployment of such a summons infringes upon Fourth Amendment rights and constitutes a misuse of the third-party doctrine—a disputed legal principle that allows government access to data stored by external service providers without the need for a warrant.
It was stated by Coinbase’s chief legal officer, Paul Grewal, on the social media platform X that, according to the third-party doctrine, no reasonable expectation of privacy is retained when information is voluntarily shared with an external party. He further remarked:
Today Coinbase filed an amicus brief with the U.S. Supreme Court to right this wrong.
Coinbase’s chief legal officer emphasized that strong opposition had been mounted against the IRS’s broad data request during the initial enforcement action in 2017. It was noted that the financial records of over 500,000 Coinbase users had been sought by the IRS, prompting firm resistance by the company on behalf of its customers. As a result, the scope of the request was significantly reduced by the agency. However, it was pointed out that courts too frequently permit such expansive data collection efforts, often referred to as fishing expeditions.
It was cautioned by Coinbase in its brief that the ruling of the First Circuit Court had been interpreted as a de facto approval of perpetual surveillance over blockchain transactions. Serious concerns regarding digital privacy were raised, as it was argued that once a user’s identity is linked to a wallet address, authorities are able to monitor all prior and upcoming activity on the blockchain. The company asserted that this broad level of access to personal data extends beyond just cryptocurrency matters. Additional remarks were made by Grewal, who stated:
We believe in tax compliance, but this goes far beyond a narrow and tailored request and far beyond crypto. This applies to banks, phone companies, ISPs, email, you name it.
It was further stated by him that the right to privacy for one’s digital inbox or account should be upheld in the same manner as the privacy granted to a physical letter placed in a mailbox.
The Supreme Court’s 2018 ruling in Carpenter v. United States was referenced by Coinbase to assert that outdated legal precedents from the 1970s should not be applied to modern surveillance practices facilitated by digital technologies. A call was made in the brief for the Court to reestablish substantial boundaries on governmental access to personal information in the digital age, stressing that unrestricted reliance on the third-party doctrine could potentially eliminate privacy expectations across a wide range of online platforms.
