IRS is not Infringing Privacy By Requesting Data From Crypto Exchanges, Judge Decides


A federal court from California has recently decided that the requests made by the Internal Revenue System (IRS) to the cryptocurrency exchange Bitstamp in a specific case were not illegal. According to the judge, most of the arguments provided by William Zietzke, who filed a lawsuit against the IRS, lack merit.

Zietzke argued that the IRS is overstepping its bounds by asking crypto exchanges to provide data about the transactions made by their clients. In his case, he asked for a refund after overestimating his long-term gains back in 2016.

During the investigation to see if he was right, the IRS discovered that he had failed to inform about a Bitstamp account that he had at the time. This prompted the government agency to request Bitstamp to give data about Zietzke’s holdings, as well as the public keys related to all of his transactions. The information was deemed important to aid in the investigation of whether he was concealing money or not.

The argument of the investor is that the IRS acted in bad faith and he presented six arguments, five of which were denied. One of them was approved, however. The summons was considered “overbroad” because it looked for both relevant and irrelevant information about the case. The IRS should have only asked for information that could be directly linked to the case.

All of the other arguments were refuted, however, which gives more strength to the IRS in future cases in which the government entity decides to summon crypto exchanges to provide information about their clients.

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