The DeFi Education Fund (DEF), a cryptocurrency advocacy group, has filed an amicus brief urging the U.S. Court of Appeals to consider the unique aspects of blockchain technology when evaluating the privacy rights of cryptocurrency users under the Fourth Amendment. The brief supports James Harper’s appeal against the Internal Revenue Service (IRS), challenging the government’s access to user transaction history on cryptocurrency platforms.
Harper was one of 14,355 Coinbase users whose data was handed over to the IRS in 2017 following a court order. DEF argues that this case raises concerns about the balance between law enforcement’s investigative powers and an individual’s right to financial privacy in the digital age.
DEF contends that the Fourth Amendment, which protects individuals from unreasonable searches and seizures by the government, needs to be revised to address the challenges posed by evolving technology. It emphasises the need to preserve the level of privacy that existed when the Fourth Amendment was adopted.
The advocacy group draws attention to the Carpenter v United States case, asserting that the Fourth Amendment limits the government’s capacity to obtain data from third-party platforms like Coinbase. Cryptocurrency transactions, being traceable on public ledgers, allow the connection of real-life identities to pseudonymous addresses, impacting the privacy and livelihoods of all users involved.
The group argues that the government’s request provided an extensive overview of users’ lives, including “familial, political, professional, religious, and sexual associations.” DEF contends that this level of insight surpasses what is attainable through traditional banking records.
The DeFi Education Fund’s mission is to educate policymakers about decentralised finance benefits and achieve regulatory clarity for the DeFi ecosystem. In this case, it highlights the broader implications for digital privacy rights and law enforcement measures in the United States.
In a landmark case involving the IRS and cryptocurrency exchange Kraken, the DeFi Education Fund (DEF) has filed an amicus brief urging the U.S. Supreme Court to consider the unique aspects of crypto technology when evaluating privacy rights under the Fourth Amendment. The case, IRS vs. James Harper, centres on the government’s order for Kraken to provide data related to cryptocurrency transaction records of over 14,000 people, including Harper, for tax enforcement purposes.
DEF argues that the court must recognize the distinctions between cryptocurrency technology and traditional financial institutions when addressing Fourth Amendment concerns. Amanda Tuminelli, DEF’s chief legal officer, emphasises that blockchain data offers authorities an “intimate view into a person’s financial life in the past, present, and future,” potentially violating Fourth Amendment rights.
Tuminelli underscores the importance of upholding privacy rights in the digital age, citing the Supreme Court’s guidance in Kyllo v. United States. The amicus brief raises three key considerations for the court’s deliberation.
Firstly, DEF argues that the court should not treat Fourth Amendment protections differently in cases involving information held by third parties. It points to Carpenter v. United States as the most recent and authoritative statement on the “third-party” doctrine, limiting government access to private data.
Secondly, the brief highlights the unique nature of cryptocurrency transactions, emphasising that they are not analogous to traditional banking. The public ledger’s traceability allows unprecedented insight into users’ financial lives and personal associations.
Lastly, DEF invokes Supreme Court precedents, urging the court to adapt its approach to privacy concerns in light of evolving technology. It contends that the government’s access to unrelated transactions through cryptocurrency technology requires a reevaluation of existing Fourth Amendment jurisprudence.
The outcome of Harper v Werfel and Internal Revenue Services is expected to have far-reaching implications for the cryptocurrency community and digital privacy advocates. As the Supreme Court prepares to hear the case, the crypto industry and privacy advocates anticipate a decision that will set a precedent for protecting digital assets and personal information in an ever-evolving technological landscape.