The amicus brief was filed to support an appeal against the U.S. Internal Revenue Service in relation to a 2017 court order where Coinbase was forced to hand over data from more than 14,300 of its users.
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Cryptocurrency advocacy group the DeFi Education Fund (DEF) has urged a United States court to consider the unique aspects of blockchain technology when evaluating the privacy rights of cryptocurrency users under the Fourth Amendment of the U.S. Constitution.
DEF filed an amicus brief to the U.S. Court of Appeals for the First Circuit on Oct. 20, supporting James Harper’s appeal against the Internal Revenue Service (IRS) as part of a fight to prevent the U.S. government from having unfettered access to a user’s transaction history on cryptocurrency platforms.
Harper was one of 14,355 Coinbase users whose data was handed over by the cryptocurrency exchange to the IRS following a court order in 2017, which sparked a fight for stronger digital privacy rights.
DEF is proud to support the industry by filing amicus briefs in precedent-setting cases, such as Harper v. IRS, which involves a John Doe subpoena to Coinbase that resulted in over 14,000 users’ private financial information being sent to the IRS.
— DeFi Education Fund (@fund_defi) October 20, 2023
DEF argued that the Fourth Amendment needs to be revised to rebalance law enforcement’s investigative powers and an individual’s right to financial privacy in the digital age.
“When old precedents meet new technology, courts must ‘assure preservation of that degree of privacy against government that existed when the Fourth Amendment was adopted.’”
The Fourth Amendment of the U.S. Constitution protects people from unreasonable searches and seizures by the government.
DEF also pointed to the case of Carpenter vs. United States to argue that the Fourth Amendment purports to limit the U.S. government’s capacity to obtain data from third-party platforms like Coinbase.
The advocacy group further explained that because cryptocurrency transactions are traceable on public ledgers, it is possible to connect real-life identities to their pseudonymous addresses.
This impacted the livelihoods of all 14,355 users in the Coinbase case. DEF explained:
“The government’s request in this case therefore implicated every user’s every transaction, now and forever, including their ‘familial, political, professional, religious, and sexual associations.”
“It gave the government a “detailed, encyclopedic, and effortlessly compiled” synopsis of the lives of Harper and 14,354 others,” DEF added.
This degree of insight far exceeds what is attainable through traditional banking records, the lobby group argued.
4/ We argue that the Court must take into account core differences between crypto technology and TradFi because blockchain data provides the government with an intimate view into a person’s financial life in the past, present, and future. pic.twitter.com/KORSLRhqNY
— Amanda Tuminelli (@amandatums) October 20, 2023
The DeFi Education Fund’s mission is to educate policymakers about the benefits of decentralized finance and to achieve regulatory clarity for the DeFi ecosystem.
The final decision of Harper vs. Werfel and Internal Revenue Services is expected to set a precedent for digital privacy rights and law enforcement measures in the United States.