Coinbase Ordered by IRS to Hand Over 13,000 Users’ Data IMMEDIATELY!
The Ongoing Battle Between Coinbase and the IRS!
It’s no secret that the IRS has been hot on the heels of Coinbase and its users’ transactional information for over a year, with Coinbase receiving a John Doe summons dating back to December 8th, 2016, with further demands throughout 2017 that transactional data from 2013-2015 was to be handed over.
Coinbase fought back and won a “partial” victory, reducing the amount of data demanded for submission. Unfortunately, while that battle was won, the war was not!
IRS Wins! Summons Will Affect Thousands of Users!
In November 2017, the San Francisco court ruled that Coinbase MUST hand over data of users who completed transactions of more than $20,000 through their accounts from 2013–2015!
“Moreover, Coinbase itself admits that the Narrowed Summons requests information regarding 8.9 million Coinbase transactions and 14,355 Coinbase account holders.
That only 800 to 900 taxpayers reported gains related to bitcoin in each of the relevant years and that more than 14,000 Coinbase users have either bought, sold, sent or received at least $20,000 worth of bitcoin in a given year suggests that many Coinbase users may not be reporting their bitcoin gains.
The IRS has a legitimate interest in investigating these taxpayers.”
According to the recent notification sent out by Coinbase themselves, the categories of information demanded by the IRS range from private information to transactional data.
“On February 23rd, 2018, Coinbase notified a group of approximately 13,000 customers concerning a summons from the IRS regarding their Coinbase accounts.
The court ordered Coinbase to provide taxpayer ID, name, birth date, address, and historical transaction records for certain higher-transacting customers during the 2013-2015 period.
While Coinbase is unable to provide legal or tax advice, please refer to our Taxes FAQ for more information on taxes and digital currency.”
Coinbase’s support article goes on to encourage affected users to seek professional advice on the matter.
“If you have concerns about this, we encourage you to seek legal advice from an attorney promptly. Coinbase expects to produce the information covered by the court’s order within 21 days.”
Source: Coinbase Support
How Will This Affect Coinbase
While this latest development in the battle against the IRS does not come as a surprise, it leaves many unanswered questions.
As Coinbase is one of the leading exchanges in the world for purchasing Bitcoin, Litecoin, and Ethereum, will other regulatory authorities from other countries make an attempt to demand information about their citizens?
With the E.U. and other Western nations taking tax evasion via cryptocurrencies more seriously, the reality of this happening is actually a possibility!
It is likely that Coinbase will still trade and be “open” for business for many years to come, but as a business, it will probably take more steps to protect and make its customers aware of potential liabilities they could face in the years following.
Privacy Coins That You Stay Can Anonymous With
With Coinbase under the eye of the law and Bitcoin transactions being traceable by the addresses users send to, is there any privacy in the cryptocurrency space?
Below are some anonymous cryptocurrencies that use encrypted transactions to keep all activity on the network fully private and decentralized.
PLEASE NOTE that this is not investment advice, and when using these coins on a centralized exchange, the exchange will have the purchase history and know all data about the transactions and trades.
If you send via peer-to-peer without the exchanges, the personal sender and receiver only know the transaction!
Zcash – This cryptocurrency uses encrypted transactions to give the user full transparency on the network. This is achieved by using zk-SNARKS, which allows the encrypted transaction to be accepted on the network by miners.
Zcash is the result of the Zerocoin protocol, which is what Zcoin originally used. Zcash’s protocol is the 2.0 to Zcoin’s.
Where to buy:
Where to store:
Monero – The primary currency used on the dark markets, Monero is another favourite in the privacy coin market. It is different to Zcash and other Zerocoin protocol-based cryptocurrencies, as it uses “ring signatures” and “stealth addresses.”
This works by creating one-time addresses for each transaction. The ring signature is a type of encrypted digital signature. A member of a group that each possess the keys can anonymously verify a transaction without it ever being traced back to them.
Where to buy:
Where to store
Always remember to fully research an exchange or cryptocurrency before purchasing or submitting your information, and research the respective laws of your country. Only invest what you can afford to lose, and be aware of potential tax liabilities in years to come.