Last week, paperwork for a “John Doe” summons was filed by the Department of Justice on behalf of the IRS, who is seeking to uncover the identities of Coinbase users in the United States who transferred virtual currency between December 31st, 2013 and December 31st, 2015. Coinbase, the company that is being requested to release this information, is a company that allows its users to buy, sell, send, and receive virtual currencies such as Bitcoin and Ethereum.
A “John Does” summons is an order that, according to an article on the Forbes website, “identifies a person or ascertainable group or class by their activities”. The IRS is using this order to search for Coinbase users that may have failed to report their earnings or have committed tax fraud. They have already found instances of Coinbase users reporting the amount they spent on Bitcoins as tax deductions for technology expenses.
The “John Doe” summons could potentially uncover a great deal of information about a large amount of people. Coinbase says that it has 4.8 million users to date and was considered “the fourth largest exchanger globally of bitcoin into U.S. dollars and the largest exchanger in the U.S. of bitcoin into U.S. dollars” as of December of last year. The order is asking for information such as U.S. addresses, telephone numbers, e-mail accounts, bank accounts, all wallet activity on the Coinbase website.
Coinbase released a statement to its users on its blog, “Our customers may be aware that the U.S. government filed a civil petition yesterday in federal court seeking disclosure of all Coinbase U.S. customers’ records over a three year period. The government has not alleged any wrongdoing on the part of Coinbase and its petition is predicated on sweeping statements that taxpayers may use virtual currency to evade taxes. Although Coinbase’s general practice is to cooperate with properly targeted law enforcement inquiries, we are extremely concerned with the indiscriminate breadth of the government’s request. Our customers’ privacy rights are important to us and our legal team is in the process of examining the government’s petition. In its current form, we will oppose the government’s petition in court. We will continue to keep our customers informed on developments in this matter.”