The United States Supreme Court has refused to hear a case involving a Coinbase user alleging violations of his Fourth Amendment rights over data sent to the Internal Revenue Service (IRS).
In a Monday notice, the country’s top court denied a motion to review James Harper’s case against the IRS and several of its officials. The case stemmed from the IRS compelling Coinbase to turn over data from certain users in a “John Doe” summons, resulting in Harper filing a lawsuit against the federal tax collection agency in 2020.
Harper’s initial complaint alleged that the IRS and its officials conducted an “unlawful search and seizure of [his] private financial information,” in violation of the Fourth Amendment of the US Constitution.
The US District Court for the District of New Hampshire dismissed the case in March 2021, leading to an appeal with the First Circuit, which also issued a ruling against Harper.
Without the Supreme Court considering a potentially different judgment in the case, the lower court ruling will stand, setting significant precedents for digital privacy rights for crypto users in the US.
Coinbase filed an amicus brief supporting Harper’s petition, claiming that, should the lower court ruling stand, the US government could “trace users’ every crypto transaction in the past and monitor every crypto transaction in the future.”
Related: Supreme Court ruling ‘changes the game’ for US crypto firms
“We believe in tax compliance, but this goes far beyond a narrow and tailored request and far beyond crypto,” said Coinbase Chief Legal Officer Paul Grewal, in an April 30 X post. “This applies to banks, phone companies, ISPs, email, you name it […] you should have the same right to privacy for your inbox or account as you have for a letter in your mailbox.“
After the 2025 tax season, crypto users are reporting IRS warning letters
Crypto tax software company CoinLedger reported a 758% increase in its users mentioning IRS letters in support chats. This suggested an increase in the number of letters the agency may be issuing in response to unreported or underreported digital asset transactions. Though the company reported the data before the Supreme Court denied a review of Harper’s petition, it alluded to the impact on users’ privacy.
“[IRS Letters] don’t necessarily indicate wrongdoing,” said CoinLedger. “In many cases, recipients are simply crypto investors known to the IRS through John Doe Summons issued to exchanges like Coinbase and Poloniex.”
Cointelegraph reached out to a Coinbase spokesperson for comment but had not received a response at the time of publication.
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