Coinbase Ordered to Report Thousands of Top Users to IRS
Coinbase has lost an opportunity to block a U.S. tax investigation on their customers. The company is now compelled to hand over information on all members with more than $20,000 worth of Bitcoins in their Coinbase wallets, which covers 14,355 users as of this time.
It's a number that's expected to go higher, as the cryptocurrency has just gone past $9,000, and later, $10,000, in value. A Federal court in San Francisco, California has ordered Coinbase to turn over to the Internal Revenue Service records for all their users who have handled more than $20,000 worth of Bitcoins in their account in a single year, as The Verge explained the ruling.
The order, as issued by U.S. Magistrate Judge Jacqueline Scott Corley, also determines that the IRS probe is not an overly invasive demand for information. The ruling covers all transactions from 2013 to 2015, during which, only about 800 to 900 taxpayers properly reported Bitcoin earnings, according to Bloomberg.
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Coinbase estimates that 14,355 users fall under these criteria. In turn, the company is asked to turn over to the IRS user names, birth dates, addresses, taxpayer ID numbers, account activity entries and account statements associated with their Coinbase identities.
Companies and groups that deal with Bitcoin do not agree with how the IRS conducted their request. "We remain deeply unsatisfied with the lack of justification provided by the IRS," Peter Van Valkenburgh from Coin Center said.
"Without better rationale for why these specific transactions were suspect, a similarly sweeping request could be made for customer data from any financial institution," he explained, adding how the decision could start a worrying precedent about financial privacy rules.
For their part, Coinbase may have lost their bid to block the request, but the new ruling is significantly narrower in scope than the IRS's initial request. "We are proud to fight for our customers and in the result we were able to achieve as a small company against a large government agency," Coinbase said in a statement.
