The US government has asked the Supreme Court to reject a Coinbase user’s appeal challenging the IRS’s right to obtain his cryptocurrency transaction data. In a May 30 filing, Solicitor General D. John Sauer argued that Coinbase user James Harper has no constitutional claim under the Fourth Amendment, as he voluntarily shared his data with the exchange.

Harper's case stems from a 2016 IRS crackdown on tax evasion involving crypto. The agency found a major gap between the number of users trading Bitcoin on Coinbase and those reporting gains. This led the IRS to issue a “John Doe” summons, legally compelling Coinbase to hand over records of high-volume traders.

Harper, who was among those users, later sued the IRS, claiming the search was unconstitutional. However, lower courts sided with the IRS, stating that financial records held by Coinbase are considered business documents, not private papers. The government cited prior Supreme Court rulings, such as United States v. Miller, emphasizing that there is no reasonable expectation of privacy in records held by third parties.

The government also highlighted Coinbase’s own privacy policy, which explicitly warns users that their data could be shared with law enforcement. The Supreme Court has not yet decided whether to hear the case.

Adding to Coinbase's troubles, the company recently confirmed a serious data breach. On May 15, attackers bribed customer support staff in India to gain access to sensitive user data, including names, balances, and transaction history. Around 1% of users were affected, including Sequoia Capital’s Roelof Botha. Coinbase now faces multiple lawsuits over its handling of the breach and its alleged failure to protect user data.