One of the major attractions of Bitcoin, Etherium, Monero and other crypto-currencies has been the ability to keep your transactions anonymous, away from the prying eyes of governments, law enforcement agencies, and anyone else. A recent ruling in a federal district court in California will change that.
The court ordered popular crypto-currency exchange and wallet service Coinbase to turn over records on more than 14,000 customers to the IRS. This came after a year long legal fight which removed the majority of items on the IRS wish list, but still provided for some limited anonymity veil piercing.
Specifically, the IRS wanted all information on any US residents who “at any time during the period January 1 2013, through December 31 2015, conducted transactions in a convertible virtual currency as defined in IRS Notice 2014-21.” This included information such as passports, driver’s licenses, wallet addresses, and public encryption keys for all accounts and wallets. This would have affected over 500,00 individuals, including yours truly. Thankfully, this was rejected by the court as overly broad.
But the court did allow for the IRS to get information about Coinbase account holders that made at least $20,000 in any single transaction. Coinbase has been ordered to turn over the taxpayer ID number, name, birth date, address, and records of account activity for those 14,000 customers who made transactions of $20,000 or more.
When the IRS can make sweeping demands for financial records, it sets a bad precedent for financial privacy. The case against Coinbase can not only be used against other crypto-currency exchanges, but also against traditional financial institutions as well.