Federal Judge Denies Dropping the Bitstamp Exchange Records Summons Issued by the IRS


A United States federal judge refused to stop a petition brought forward by a Washington state resident that sought to stop the IRS (Internal Revenue Service) from collecting information pertaining to his BTC holdings from the exchange.

In a ruling delivered this past Monday, John Coughenour, judge of the United States District Court for the Western District of Washington in its place ordered the revenue service to try and narrow down the number of summons that it had sent to Bitstamp.

Notable Ruling

What makes this particular ruling notable is the fact that the federal judge overruled two arguments that would probably resonate with many digital assets users. Some of this would be the cypherpunk, early adopters.

The judge noted that third parties such as the tax collector are not in a position to be trusted with safeguarding private information, especially given that the petitioner had a constitutional right to have their financial information remain private.

According to this particular order:

William Zietzke filed the petition to quash the IRS summons on Bitstamp, after the agency began an audit of his cryptocurrency holdings and transactions following the filing of an amended tax return.”

William had in 2016 filed a capital gain of $104,482 for the year. At the time, he indicated that a large chunk of his funds was based on two BTC transactions. But a year later, he noted that the said transactions did not occur in 2016 and, therefore, sought to file an amended return. The return in this case only showed a capital gain of $410, which is why he was requesting a refund.

As a result, the revenue services started reviewing all his digital assets transactions. This includes checking all the numerous services that he had used, e.g., Bitstamp. It’s the reason the agency sent out summons to Bitstamp in a bid to establish the total number of transactions that the petitioner had made since the moment his account was opened.

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