- Supreme Court declined to revisit IRS summons on Coinbase
- Exchange turned over records for over 14,000 users
- Ruling reinforces third-party doctrine for financial data
The US Supreme Court recently declined to review an IRS summons compelling Coinbase Global Inc. to disclose transaction records for over 14,000 cryptocurrency users. This refusal came without comment, leaving intact a lower court decision that upheld the summons under a legal framework established in 1976. The Fourth Amendment challenge focused on privacy rights in bank-held records, and its rejection has significant implications for digital financial data and government investigations.
Supreme Court denies Harper challenge to IRS summons
In 2019, the Internal Revenue Service issued a summons targeting Coinbase account holder James Harper, alleging widespread underreporting of capital gains on virtual currency. Harper, who asserted full tax compliance, challenged the summons by invoking the Fourth Amendment’s protection against unreasonable searches and seizures. His appeal sought to revisit a landmark 1976 ruling that denied constitutional privacy rights to customers over records held by banks and similar third parties. After the federal appeals court upheld the IRS demand, Harper petitioned the Supreme Court, which on June 26, 2025, refused his appeal, effectively affirming the lower court’s stance.
Role of the Supreme Court in Third-Party Doctrine
The 1976 Supreme Court decision in United States v. Miller established that individuals lack a reasonable expectation of privacy for information voluntarily shared with third parties, such as banks. This “third-party doctrine” was extended to telephone metadata in 1979, permitting law enforcement to obtain call records without warrants. By refusing to reconsider this doctrine, the Supreme Court maintains a legal environment where the IRS can access extensive financial records—including those of 500,000 Coinbase users initially targeted in 2016—without individualized warrants.
Historical context of third-party doctrine
The third-party doctrine originated in an era of paper ledgers and landline telephones. In Miller, the Court held that financial institution records are business records, not personal papers. Similarly, in Smith v. Maryland (1979), the Court found no Fourth Amendment protection for dialed phone numbers, as users knowingly conveyed that information to phone companies. These rulings set a precedent that government agencies could compel production of sensitive data without judicial oversight, provided it was held by a third party.
Impact of Supreme Court decisions on digital privacy
Modern financial services have transformed how personal data is stored and shared. Cryptocurrency platforms like Coinbase maintain detailed transaction histories for millions of users. The Supreme Court’s refusal to revisit the third-party doctrine means that the IRS can compel disclosure of transaction details—wallet addresses, trade amounts, timestamps—for customers without obtaining a warrant. Privacy advocates warn that over 14,000 individuals in Harper’s case have seen their most sensitive financial data exposed, simply because they entrusted it to an exchange.
legal precedents since 1976
In 2018, the Supreme Court recognized a narrow exception to the third-party rule in Carpenter v. United States, ruling that long-term cell-site location information requires a warrant under the Fourth Amendment. Justice Neil Gorsuch, in a concurring opinion, criticized the traditional doctrine, noting that third-party possession does not eliminate privacy interests. Despite this, the recent decision leaves intact the broad reach of Miller and Smith for non-location digital records, including bank and cryptocurrency data.
implications for cryptocurrency users
With the Supreme Court’s refusal, cryptocurrency holders must assume that any data stored on exchanges can be accessed by the IRS through summons. Coinbase resisted the 2016 demand for half a million customer records for over a year to avoid contempt, yet eventually complied, providing Harper’s data among others. As digital assets become mainstream, individuals and businesses face increased exposure to government scrutiny. The ruling underscores the tension between evolving technology and constitutional protections shaped in the 20th century.
Conclusion
The Supreme Court’s decision to let the IRS summons stand reaffirms that the third-party doctrine continues to govern financial privacy in the digital age. By upholding the 1976 framework, the justices have allowed broad access to personal transaction information for over 14,000 cryptocurrency users and potentially millions more. While narrow exceptions exist, the core principle that data held by third parties falls outside Fourth Amendment safeguards remains unaltered.
Disclaimer
The information provided in this article is for informational purposes only and should not be considered financial advice. The article does not offer sufficient information to make investment decisions, nor does it constitute an offer, recommendation, or solicitation to buy or sell any financial instrument. The content is opinion of the author and does not reflect any view or suggestion or any kind of advise from CryptoNewsBytes.com. The author declares he does not hold any of the above mentioned tokens or received any incentive from any company.
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