Coinbase User Asks Federal Court to Stop IRS Bitcoin Subpoena

A Coinbase customer has gone to court to stop the Internal Revenue Service from subpoenaing user data from the bitcoin and ether exchange startup.

According to new filings dated 13th December, Los Angeles-based lawyer Jeffrey Berns has disputed the legitimacy of the IRS effort to obtain three years’ worth of user records. The IRS pursuit of a ‘John Doe’ summons, begun last month, was approved by US Judge Jacqueline Scott Corley on 30th November.

Berns – who is being represented by the firm for which he is a managing partner, according to LinkedIn – is asking the court to invalidate its previous approval, or, alternatively, to put in place a protective order to stop the effort in its tracks. He argued that the John Doe summons “would constitute an abuse of process” and blasted the document request proposed by the US tax agency as “overbroad”.

Lawyers for Berns argued that the filing wasn’t the result of an effort to protect himself from any kind of tax investigation, writing:

“Instead, Movant’s intent is to protect the interests of all of Coinbase’s customers who are subject to this overbroad summons, even though the IRS has made no showing that any of them have engaged in suspect tax-avoidance conduct.”

When reached for comment, Berns Weiss representatives said the filing was, ultimately, submitted in support of users of Coinbase that could be subject to IRS scrutiny.

"While Coinbase has a business interest in protecting its customers’ private information, it also has a business interest in not being adversarial with government regulators," the firm said. "Further, to the extent that there may be a negotiation with the government regarding a possible agreement for the production of a subset of the information sought by the Summons, Coinbase’s customers should be fully represented in any such negotiation."

Coinbase, when reached, said that it was aware Berns' effort.

“We are aware of the motion to intervene filed today by Jeffrey K. Berns in the IRS petition. We are tracking all court proceedings and look forward to engaging the IRS,” the company said in a statement. “We will keep our customers updated on any significant developments with respect to Coinbase's engagement on this matter.”

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Coinbase.

The full motion to intervene can be found below:

Notice of Motion and Motion to Intervene by CoinDesk on Scribd

Correction: This article has been updated to reflect that the IRS is seeking records covering three years, not two.