The U.S. government has urged the Supreme Court to reject a petition from James Harper, a Coinbase user who alleges that the IRS violated his Fourth Amendment rights by accessing his crypto transaction data without a warrant. In a May 30 filing, Solicitor General D. John Sauer contended that Harper’s claim lacks merit, arguing that he voluntarily submitted his financial data to Coinbase.
At the heart of the case is a 2016 IRS investigation into cryptocurrency tax evasion. As part of that effort, the IRS issued a “John Doe” summons to obtain records from Coinbase on users with significant transaction volume. The summons was approved by a federal court, and the government insists the data collection was both lawful and routine.
Prosecutors argue that the financial records in question are considered business documents maintained by a third party—Coinbase—and are therefore not protected by constitutional privacy rights. The Supreme Court is now weighing whether to hear the case.
IRS Defends Record Access Using Established Legal Precedent
Harper’s attempt to challenge the IRS’s reach into his crypto history is facing increasing legal headwinds. He contends that the agency’s actions amount to an unlawful search and seizure. However, both district and appellate courts have dismissed this view, citing longstanding legal precedent.
In its Supreme Court brief, the government referenced the 1976 case United States v. Miller, which held that individuals do not have a reasonable expectation of privacy over records maintained by third parties. Coinbase’s own user agreement and privacy policy also state that account information may be shared with law enforcement, further undermining Harper’s constitutional claim.
If the Supreme Court declines to take up the case, the First Circuit’s ruling in favor of the IRS will remain in effect, reinforcing the government’s authority to access third-party financial data without a warrant.
Coinbase Faces Insider Breach Tied to Bribery Scheme
Adding to Coinbase’s legal troubles, the exchange disclosed a serious data breach earlier this month involving insider misconduct. On May 15, Coinbase revealed that hackers had bribed customer support contractors in India to obtain unauthorized access to user data.
The compromised data included full names, account balances, and transaction histories. Roughly 1% of Coinbase’s monthly active users were affected, including Sequoia Capital’s managing partner, Roelof Botha.
The fallout was swift. Within two days of the announcement, at least six lawsuits were filed accusing Coinbase of negligent security practices and failing to properly respond to the breach. The incident has reignited debate around the risks of centralized exchanges and the dangers of outsourcing sensitive operational roles.
Quick Facts
- The U.S. government is asking the Supreme Court to dismiss James Harper’s appeal challenging IRS access to Coinbase data
- Harper claims a Fourth Amendment violation; lower courts disagree
- The dispute stems from a 2016 IRS “John Doe” summons issued to Coinbase
- A Supreme Court refusal to hear the case would uphold the IRS’s position
