IRS Demands Records of 4.8 Million Bitcoin Users over 3 Alleged Tax Dodgers

San Francisco headquartered Bitcoin and Ethereum exchange Coinbase has notified its clients that the US government is seeking all the information the firm collected on its clients in the country. The American tax agency, the IRS (Internal Revenue Service), filed a petition in federal court seeking disclosure of all Coinbase US customer records over a three year period, 2013-2015.

The firm explains that the IRS demands are nonspecific to any case and extremely broad in scope: "The government has not alleged any wrongdoing on the part of Coinbase and its petition is predicated on sweeping statements that taxpayers may use virtual currency to evade taxes." According to a report by the New York Times, the IRS took this step after it found just three cases where people allegedly tried to dodge paying taxes using Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term, and only two of these were even Coinbase clients.

Founded in June 2012, the exchange has served 4.8 million clients and issued 10.6 million cryptocurrency wallets, making it the leading provider in the US market. It also supports 45,000 merchants and 9,000 developer apps. One of the biggest draws of using bitcoin to begin with was a higher level of anonymity than traditional online Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term methods - having the government know the identities of millions of users and the wallets linked to them will largely defeat this purpose if it comes to pass.

The firm reassured its American clients that it will try to oppose the request under the legal protections they are entitled to. "Although Coinbase's general practice is to cooperate with properly targeted law enforcement inquiries, we are extremely concerned with the indiscriminate breadth of the government's request. Our customers’ privacy rights are important to us and our legal team is in the process of examining the government's petition. In its current form, we will oppose the government’s petition in court."