Coinbase, James Harper warn that unfettered IRS access to blockchain records risks “real-time” surveillance of user activity

The US Supreme Court on June 30, 2025, declined without comment to review Harper v. Faulkender, ending James Harper’s challenge to an IRS “John Doe” summons that compelled Coinbase to hand over transaction records for more than 14,000 users.

The case, Harper v. Faulkender, centers on Coinbase account holder James Harper’s challenge to a 1976 Supreme Court ruling, United States v. Miller, which holds that people lack a reasonable expectation of privacy in financial records held by third parties.

In 2016, the IRS issued a John Doe summons to Coinbase, seeking financial data tied to potential tax underreporting on cryptocurrency gains. Harper says he correctly reported and paid taxes on his crypto profits, but sued, arguing the data seizure violated his Fourth Amendment rights.

Lower courts concurred with the IRS, applying the third-party doctrine from United States v. Miller (1976), which holds that customers lack privacy rights in records held by intermediaries like banks or, in this case, crypto exchanges.

The Supreme Court’s refusal means special rules for crypto

By refusing to hear the appeal, the Supreme Court leaves the First Circuit’s ruling intact. For now, Americans using crypto exchanges have no Fourth Amendment protection over transaction logs held by third parties.

Privacy advocates hoped this case would extend the narrow Carpenter v. United States (2018) exception, which required warrants to access historical cell-site data, to financial platforms.

But the Court’s silence when refusing review signals no new legal guardrails will emerge for now. This also means crypto platforms and other digital services cannot refuse requests for user data from the IRS and other related federal agencies.

Harper’s lawsuit claimed the ruling strips “millions of Americans” of meaningful privacy over digital financial data. Coinbase, backing Harper via an amicus brief filed in April, warned that the IRS dragnet allows reconstruction and future tracking of user activity—“a real‑time monitor” of every transaction.

Chief Legal Officer Paul Grewal emphasized that without limits, Fourth Amendment protections over bank accounts, emails, and phone records could evaporate—and that digital platforms should receive no less privacy protection than physical mail.

The Trump administration urged the Court to reject the appeal, arguing Harper “lacks any reasonable expectation of privacy in Coinbase’s records.” They maintain that users voluntarily share data with platforms, forfeiting Fourth Amendment protection.

Other cases are challenging subpoenas to access digital data

X (formerly Twitter), now under Elon Musk, filed its own amicus brief in April, warning that broad, suspicionless subpoenas pose a threat not just to financial platforms but social media too.

X’s filing stated that the government’s ability to snoop on private accounts without warrants endangers free expression and data privacy on all digital platforms.

With no Supreme Court intervention, the First Circuit’s interpretation will continue to influence similar cases across the country, granting the IRS the power to subpoena digital financial data stored by custodial services.

There’s growing momentum from privacy groups and bipartisan lawmakers to update Fourth Amendment protections for digital data. So, Congress or future litigation may eventually challenge the doctrine’s place in the crypto era.

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