Berns Weiss LLP Opposes IRS Attempt To Access Coinbase Customer Information

On May 15, 2017, Berns Weiss LLP filed a motion on behalf of two unidentified Coinbase exchange customers to intervene in a federal court proceeding in which the Government is seeking to enforce an Internal Revenue Service (IRS) “John Doe” summons served upon Coinbase. The proposed intervenors are seeking to quash the summons, and also to proceed in the case anonymously, as the Government has previously withdrawn the summons as to a Coinbase user who identified himself in his challenge to the summons.

Berns Weiss LLP issued the following statement after filing the motion:

"On March 16, 2017, when the Government filed its petition to enforce the IRS summons, we indicated that we intended to file a motion to intervene and to quash the summons on behalf of Coinbase customers in order to protect them from this government overreach. As the Court recently directed the Government and Coinbase to agree on a schedule for Coinbase to oppose the petition, we have now filed such a motion seeking to insure that Coinbase’s customers are represented in the proceeding and that the Court has the opportunity to consider their perspective. Additionally, to prevent the Government from repeating its prior tactic of withdrawing the summons as to a proposed intervenor and then contending that the proposed intervenor’s motion to intervene is moot, Movants are seeking permission to proceed anonymously in this matter under fictitious names."

Berns Weiss LLP Partner Lee Weiss expressed that the firm is looking forward to challenging the summons:

"We look forward to the opportunity to finally litigate the merits of the IRS Summons and for the Court to consider the grave privacy and financial risks to which Coinbase’s customers will be exposed if the summons is enforced in its current form.”

The dispute began in November 2016 when the Department of Justice (DOJ) filed a petition in Federal Court (District Court for the Northern District of California, case no. 3:16-cv-06658-JSC) seeking authorization to serve an IRS “John Doe” summons to obtain a wide range of records related to the accounts of millions of Coinbase's customers. According to the filing, the John Doe summons requests records related to United States taxpayers who conducted virtual currency transactions through Coinbase from 2013 to 2015.

After the Court granted the Government’s petition for leave to serve the summons, managing partner of Berns Weiss LLP and Coinbase customer Jeffrey K. Berns filed a motion challenging the summons, arguing that the IRS had no legitimate purpose in seeking the requested records, that enforcement of the summons would constitute an abuse of process, and that the categories of requested documents were overbroad.

On December 27, 2016, as reported by ETHNews, the IRS withdrew its summons as to Mr. Berns because the IRS “now knows Mr. Berns’ identity.” The IRS then argued that its withdrawal of the summons as to Mr. Berns mooted his motion. Mr. Berns, however, responded that the Government’s willingness to withdraw the summons as to him, without obtaining any of the information sought by the summons other than his identity, was further evidence of bad faith.

Subsequently, Coinbase also filed a motion to intervene in the court proceeding. Before the Court could hear Mr. Berns’ and Coinbase’s motions, the Government initiated a different but related court proceeding seeking to enforce the summons (District Court for the Northern District of California, case no. 3:17-cv-01431-JSC). Mr. Berns then withdrew his motion, but Berns Weiss LLP released a statement calling the summons "unprecedented" and stating "we intend to continue to vigorously seek justice for all Coinbase customers." This sentiment is exemplified by the firm’s recent filing challenging the summons on behalf of Coinbase customers.

Jeffrey Berns is the Managing Partner of Berns Weiss LLP and is also CEO of Berns Inc, parent company to ETHNews.