San Francisco headquartered Bitcoin and Ethereum exchange Coinbase has notified its clients that the US government is seeking all the information the firm collected on its clients in the country. The American tax agency, the IRS (Internal Revenue Service), filed a petition in federal court seeking disclosure of all Coinbase US customer records over a three year period, 2013-2015.
The firm explains that the IRS demands are nonspecific to any case and extremely broad in scope: “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.” According to a report by the New York Times, the IRS took this step after it found just three cases where people allegedly tried to dodge paying taxes using cryptocurrencies, and only two of these were even Coinbase clients.
Founded in June 2012, the exchange has served 4.8 million clients and issued 10.6 million cryptocurrency wallets, making it the leading provider in the US market. It also supports 45,000 merchants and 9,000 developer apps. One of the biggest draws of using bitcoin to begin with was a higher level of anonymity than traditional online payments methods – having the government know the identities of millions of users and the wallets linked to them will largely defeat this purpose if it comes to pass.
Stocks to Watch This Week – Expedia Group, IncGo to article >>
The firm reassured its American clients that it will try to oppose the request under the legal protections they are entitled to. “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.”