IRS Summons Served on Coinbase: Court Grants Request to Continue Hearing

On November 17, 2016, the federal government filed a petition in the District Court for the Northern District of California seeking permission for the Internal Revenue Service (IRS) to serve a summons on Coinbase Inc., one of the largest cryptocurrency exchanges that serves bitcoin transactions and storage for people in 190 countries worldwide, to obtain customer data on anyone who “conducted transactions in a convertible virtual currency” between January 1, 2013, and December 31, 2015. On November 30, the Court granted the petition, and the IRS served the summons on Coinbase on December 6.

On December 13, Coinbase customer Jeffrey K. Berns filed a motion to intervene and to quash the summons, to be heard on January 19, 2017. On January 11, Coinbase filed its own motion to intervene, scheduled for a hearing on February 16. The following day, the Court moved the hearing date for Mr. Berns’ motion to February 16, 2017. On February 2, the federal government filed a stipulation requesting that the hearing date for the motions be moved to March 23, 2017, and on February 3, the Court granted the request. The hearing will address Mr. Berns’ and Coinbase’s motions to intervene.

Attorneys for the government stated that they sought the continuance not to delay the proceeding, but rather “because the United States is considering filing a petition to enforce or taking other action with respect to the John Doe summons and if more time is provided a hearing on movants’ motions may be avoided altogether, sparing the Court’s judicial resources and the Parties’ time and expense.” Hopefully, this continuance will allow the IRS to reevaluate its initial request and accordingly narrow the scope of the summons. See below for the full Stipulation and Order Requesting Continuance of February 16, 2017, Hearing of Proposed Intervenors’ Motions to Intervene and for Other Relief.