Coinbase user sues IRS for seizing cryptocurrency transaction data

A user of the Coinbase cryptocurrency exchange sued the United States Internal Revenue Service (IRS) for the seizure of his personal data that could have been obtained during the prosecution of Coinbase.

Last summer, cryptocurrency trader Jim Harper received a letter from the IRS stating that the agency had information about his cryptocurrency account, so IRS employees have reason to suspect Harper of tax evasion from profits from cryptocurrency transactions. Similar notifications received more than 10,000 other users. 

A US citizen claims to have been paying taxes regularly since 2013, so he filed a lawsuit against the IRS with the New Hampshire County Court. A trader accuses the IRS and its 10 employees of violating privacy and confidential information.

At the same time, the IRS did not disclose where it received data from Harper’s cryptocurrency transactions. The plaintiff believes that the agency could receive his confidential information at the beginning of 2018 from the Coinbase exchange, which, by order of the court, provided the IRS with data on 13,000 accounts. The information sent to the tax authorities contained the name, taxpayer identification number, place of birth, address of residence, data on the user’s operations and orders placed.

A former user of the exchange said that if his guesses were correct, then it was a violation of his rights, since Harper did not have the opportunity to challenge the seizure of his personal data. In this case, the plaintiff will seek to have the IRS delete the data on its cryptocurrency account. Harper added that if the case wins, other users who receive an IRS notice will be able to do the same.

The Coinbase prosecution began back in 2016. The IRS suspected exchange users of using cryptocurrencies to avoid reporting and paying taxes.

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