Popular digital currency broker Coinbase has suffered a major defeat to the Internal Revenue Service. A federal court in California has ordered Coinbase to reveal identifying information about 14,355 users who sold, sent, bought, or received more than $20,000 through their accounts in a single year between 2013 and 2015. It fought the case for almost an entire year before losing out to the IRS. Coinbase estimates that 14,355 of its users fit the bill.
Coinbase can find some solace in the fact that there’s a $20,000 limit to this order. The IRS had previously been seeking information on any and all Coinbase users over the same period. The request also included all communications made between the user and Coinbase. This was found a bit too excessive by the court and was therefore not granted.
Coinbase will now have to provide the IRS with the account user’s name, address, birth date, tax payer ID as well as all records of account activity. If there are any associated account statements, they will need to be turned over to the IRS as well.
The information will be enough for the IRS to definitively link accounts to individuals and the detailed records that it’s going to get will also help it to pinpoint other accounts that these users have sent money to.
There isn’t necessarily a claim of suspicion against these users. The IRS wants to look into the discrepancy between Coinbase users and U.S. citizens that are reporting Bitcoin gains to the IRS. Even though Coinbase has almost six million users, fewer than 1,000 U.S. citizens have actually reported their virtual currency holdings to the IRS.