The Third Web

Lee Weiss of the US law firm BernsWeiss discusses the Coinbase/IRS dispute. The dispute began in November 2016, when the IRS summoned Coinbase to hand over data about all users who were active on the exchange from 2013 to 2015, with a view to investigating the tax compliance of individuals who have transacted in cryptocurrencies. On behalf of one or more anonymous Coinbase users, BernsWeiss took the issue to court and was recently granted permission to argue against the summons, which among other things demanded access to users’ public and private keys. If complied with, this would effectively give the IRS access to all customer funds, making it a clear and easy target for hackers. This is an unprecedented use of the John Doe summons procedure, which was intended for situations where the IRS has identified specific tax avoidance but can’t identify the specific parties who have engaged in that illicit conduct. If determined to be legal, this summons would set a precedent under which the IRS could demand the