The IRS has been granted sweeping powers by a federal judge to delve into the customer details of Bitcoin wallets like those in Coinbase. Could this be the beginning of the end of Bitcoin as a truly subversive digital currency? (Image: gizmodo.com)<\/figcaption><\/figure>\nOn Wednesday, Judge Jacqueline Scott Corley of the California Northern District Court ruled that America\u2019s largest Bitcoin service, Coinbase, must provide the IRS with records of every customer who traded the digital currency on the site between 2014 and 2015.<\/p>\n
The so-called \u201cJohn Doe\u201d summons will lift the veil of anonymity on five million Coinbase users and reveal details of multiple-millions of transactions, as part of an effort to identify tax evaders. Despite the ruling, the value of Bitcoin has remained stable, so far, at least.<\/strong><\/em><\/p>\nSan Francisco-based Coinbase is a Bitcoin wallet, essentially a service providing online accounts for holding and trading the digital currency. In general, Bitcoin transactions are visible on a public ledger, but the identity of the\u00a0participants\u00a0is encrypted. However, Coinbase has records of its own private customers, of course.<\/p>\n
Is Bitcoin Losing its “Anti-Establishment” Credentials?<\/h2>\n
The ruling could well prove to be a blow to Bitcoin\u2019s reputation as an instrument of liberation from government law and world banking, however. The currency, and those like it, was created as an essentially subversive alternative to the world’s centralized banking systems, but more recently it has, to an extent, been integrated into the financial and legal system.<\/p>\n
In 2014,\u00a0the IRS announced that Bitcoin would be treated as property\u00a0for tax purposes, meaning that people who sold digital currencies at a profit would be liable for capital gains taxes. But first, the IRS has to find them.<\/p>\n
In September of this year, a federal judge went one step further in declaring that Bitcoin was actual \u201cmoney,\u201d in the eyes of the law. For gaming operators, Bitcoin was initially seen as a means of circumventing prohibitions in jurisdictions where online gambling was illegal, precisely because it had no legal classification. This is no longer the case.<\/p>\n
Coinbase Is Ready for Battle<\/h2>\n
Coinbase said today it intended to challenge the ruling, which it described as a \u201csweeping fishing expedition\u201d on behalf of the IRS.<\/p>\n
\u201cWe are aware of, and expected, the Court\u2019s ex parte order today,\u201d Coinbase said in a statement. \u201cWe look forward to opposing the DOJ\u2019s request in court after Coinbase is served with a subpoena. As we previously stated, we remain concerned with our US customers\u2019 legitimate privacy rights in the face of the government\u2019s sweeping request.\u201d<\/strong><\/em><\/p><\/blockquote>\nThe Justice Department wasted no time in responding, and letting users know they are on the radar.<\/p>\n
\u201cThere is no allegation in this suit that Coinbase has engaged in any wrongdoing in connection with its virtual currency exchange business,\u201d the DOJ said on Wednesday in a statement. \u201cRather, the IRS uses John Doe summonses to obtain information about possible violations of internal revenue laws by individuals whose identities are unknown.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Cryptocurrency Bitcoin\u2019s status as an anonymous, decentralized digital money source was undermined this week, for Americans at least, by a federal court ruling that grants the Internal Revenue Service (IRS) powers to seek information on its users. On Wednesday, Judge Jacqueline Scott Corley of the California Northern District Court ruled that America\u2019s largest Bitcoin service, […]<\/p>\n","protected":false},"author":42,"featured_media":42467,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,19,60],"tags":[],"acf":[],"yoast_head":"\n
Bitcoin Users' Details Must be Turned Over to IRS, Federal Court Rules<\/title>\n\n\n\n\n\n\n\n\n\n\n\n\n\t\n\t\n\t\n\n\n\n\n\n\t\n\t\n\t\n