In a recent development, the DeFi Education Fund (DEF), a crypto research and advocacy group, along with crypto investment company Paradigm, has filed an amicus brief in support of James Harper’s lawsuit against the US Internal Revenue Service (IRS). The brief urges the Supreme Court to reverse the district court’s decision, highlighting the potential consequences of dismissing Harper’s complaint on blockchain’s mainstream adoption.
Paradigm, as a leading supporter and investor in crypto and blockchain-related projects, emphasizes the critical role that privacy plays in this emerging technology. Contrary to the district court’s conclusion that there is no expectation of privacy when transacting on a crypto exchange, Paradigm asserts that the court erred in its judgment. Privacy should be recognized as an essential aspect of blockchain technology.
James Harper’s lawsuit against the IRS dates back to a 2017 court order that compelled Coinbase, a prominent cryptocurrency exchange, to disclose data on 14,355 users to the IRS. The IRS had issued a “John Doe” summons, uncertain of whether any specific Coinbase customers had failed to report income. However, based on the high volume of crypto trades, the IRS assumed that many taxpayers were evading taxes on their cryptocurrency transactions. Harper alleged that the IRS accessed his private financial records unlawfully, violating his rights.
Paradigm has previously filed similar amicus briefs in support of crypto firms such as Binance, Coinbase, and Terra in their cases against the US Securities and Exchange Commission (SEC). By doing so, the company seeks to defend the rights of cryptocurrency users and advocate for fair treatment under the law. This aligns with DEF’s mission, as they have also filed a similar amicus brief calling for the court to consider the Fourth Amendment rights of cryptocurrency users.
DEF’s amicus brief highlights the alarming fact that the US government has collected extensive information on cryptocurrency users, including their names, social security numbers, addresses, and every cryptocurrency transaction made over a three-year period. This amounts to a staggering 8.9 million transactions. When Harper contested the collection of this information, the district court surprisingly argued that the Fourth Amendment, which aims to protect individuals’ privacy and security against arbitrary invasions by governmental officials, was not applicable in this case.
DEF emphasizes the importance of considering the core differences between cryptocurrency technology and traditional finance (TradFi). Amanda Tuminelli, the chief legal officer of DEF, highlights these differences, stating that the court must take them into account. Cryptocurrency transactions differ significantly from traditional financial transactions, making the need for privacy even more crucial.
The DEF and Paradigm’s amicus briefs underscore the significance of privacy in cryptocurrency transactions. By advocating for James Harper’s lawsuit and urging the court to recognize the Fourth Amendment rights of cryptocurrency users, these organizations seek to establish a legal framework that safeguards individuals’ privacy and promotes the widespread adoption of blockchain technology. As the crypto landscape continues to evolve, it is essential to address the unique challenges and opportunities presented by this transformative technology.
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