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Wow, this sounds like a desperate attempt to put positive spin on a losing case. > we were proud to accomplish two important victories for our customers. > Fi

Wow, this sounds like a desperate attempt to put positive spin on a losing case. > we were proud to accomplish two important victories for our customers. > First, the government vastly narrowed the scope of its summons. This was already their previous "win": https://blog.coinbase.com/coinbase-irs-update-ed9c966c7747?source=user_profile---------2---------------- https://blog.coinbase.com/coinbase-irs-update-ed9c966c7747?s... Repeating this over and over again means there weren't many positives from this decision. > Second, the quantity of data we must produce for the approximately 14,000 customers who remain in scope has been significantly reduced. And what is this "quantity of data"? Are they stripping PII or transaction information from the data? If not then knowing the user information and transaction information is enough for the IRS.

dmix 9y ago
A 97% reduction from the original request does seem like a 'partial' victory to me. IRS asked for all users data it seems and they reduced it to only users with $20k in transactions with a particular timeframe. The original proposition by the government may have been totally ridiculous and over-reaching. Maybe the IRS never fully intended it to work. But I'm not so sure that's the case, given the US gov's liberal sweeping up of data. IRS also has a history of getting what it wants. But as far as tangible 'wins' here I believe you would have to be dumb to have trusted Coinbase to protect your privacy. They have always been very obviously corporate 'straight-edge' service and very willing to follow every financial rule in an effort to be fully legitimate. Given the amount of capital they raised and their US residency this is all not surprising. So I'm kinda surprised they weren't already handing over every users information... that's a win in my books. But obviously I've viewed them with very low standards.
- ironjunkie 9y ago
  97% reduction? Not really. Given how the price of BTC/ETH is going up, they will soon have to report pretty much every user that put more than a couple hundred dollars initially.
- thisisit 9y ago
  Sure it was a victory. But that was not the point of the case. IRS had already agreed to the 97% reduction as seen from the previous post. They went to court because they wanted it to reduce even more. That didn't happen here.
- logfromblammo 9y ago
  If your intent is to hide something from the government, you really need to only do your business on the black market, with people who are already strongly disincentivized to cooperate with the government. Otherwise, just pay your capital gains tax and feel good about supporting the general welfare, because every last person that depends on being in the good graces of the government in order to earn their living will roll on you in an instant. All you U.S.-based Bitcoin speculators have been paying your capital gains taxes, right?~ If you don't want to realize a taxable gain, never buy anything from the U.S. with it, especially dollars. If you don't want to realize a taxable gain that the IRS will know about, don't buy anything from anyone with an EIN. If you're going to be a criminal, please at least be an intelligent criminal. The only justification the IRS has for invading the privacy of thousands of people is because the stupid criminals are embarrassing them. They estimated only 7-9% of Bitcoiners declare and pay tax on capital gains? So if you don't want Coinbase to be forced to turn over your records, your other option is to volunteer to give them to the IRS yourself. Not much of a choice, but the government wants money, and they prefer to take it from the people who obviously have it, because it's easier. So you illegally conceal, or you legally comply. You can't do it half-assed in either direction. If your intent is the former, you cannot do it through Coinbase, because they must comply to exist. While I unequivocally despise the usual tactics of the government with respect to taxation, they are at least predictable, so anyone who is relying on Coinbase to protect them is acting foolishly.
panarky 9y ago
There's a lot of careful phrasing in this post so I don't think Coinbase is being transparent. 1) "14,000 customers" - the just a one-time demand customers records from a year ago? Coinbase had 13.1 million customers a few weeks ago, and are adding hundreds of thousands more a week. If there's a "97% reduction in the number of customers impacted" does that mean there are 13.1 million * 0.03 = 393,000 are affected? Are they doing ongoing disclosures? 2) Does the $20,000 threshold mean total value when acquired? Or current market value? Total withdrawn to a cryptocurrency address? Total withdrawn to a bank account? If I do 10 buys and 10 sells worth $1,000 each does that qualify?
- jstanley 9y ago
  It's $20k in any given transaction type. So if you do a total of $20k in buys, or $20k in sells, or deposits, or withdrawals, you are targeted. This is particuarly invasive for people running trading bots, which are likely to have very high transaction volumes but very low profit margins.
- stult 9y ago
  1) It's only 14k people, for activity between 2013-15. There are likely to be further disclosures for later years, depending on what the IRS finds for the years they are already looking at. They may also request information for more customers in later years if the number of customers that meet their criteria for suspicious activity goes up. Previously the IRS requested info on pretty much anyone, but now after court review the summons has been restricted to the customers with potentially suspicious transactions (see below). 2) According to the court order, the summons requests info for customers “with at least the equivalent of $20,000 in any one transaction type (buy, sell, send, or receive) in any one year during the 2013-2015 period.” Buy and sell transactions of BTC meaning a person put dollars in their account to convert to BTC or took BTC out of their BTC wallet for dollars in their Coinbase account. Whether they then withdrew it from Coinbase to their bank account is irrelevant for tax purposes because they either realized a gain or a loss upon the sale so they had to report it as income if there was a gain. So Coinbase will run a query aggregating the transactions by year, account, customer, and type, then produce all the records for any customer with any item over $20k, except those who had only buy transactions because the summons does not cover people who only bought and held. For send/receive transactions, the $20k will almost certainly be the FMV at the time of the transaction. That is easy enough to calculate based on transaction time, transaction BTC amount, and price of BTC at that time. The FMV should be recorded as a matter of course in Coinbase's ledgers, though I am not an insider so I do not know for certain. I would be very, very surprised if their accountants did not insist on recording that information on some ledger for book purposes anyway. The buy, sell, and withdrawal transaction amounts very definitely are recorded on their ledgers and that amount will simply be the nominal amount at the time because they are denominated in dollars anyway. If you did ten sales worth $10k total, no that wouldn't be covered. Twenty sales worth $20k would be, even if you had a corresponding $20k of buys that netted out to zero gains. In that case, Coinbase will give your info to the IRS who will then take no action because there was no income to report and thus no failure to report it. Which is to say, the IRS can request someone's info, but that does not necessarily mean the IRS will take any action or that the person has done anything wrong. The IRS has simply requested info for people whose activities can be categorized as higher risk for tax evasion. They will then compare the account information with filed tax returns to determine if the person has failed to report any income. Some people will have reported their BTC gains. Others will have no realized gains. Most people will probably fall into those categories. A very few will have very complicated records with lots of BTC sent and received which may require an audit to sort out. Some of those will be legitimate BTC users, others may be using their BTC transactions to disguise complicated financial transactions from the IRS. We'll have to see, though I am interested to see how it all shakes out.

dmix 9y ago

A 97% reduction from the original request does seem like a 'partial' victory to me. IRS asked for all users data it seems and they reduced it to only users with $20k in transactions with a particular timeframe. The original proposition by the government may have been totally ridiculous and over-reaching. Maybe the IRS never fully intended it to work. But I'm not so sure that's the case, given the US gov's liberal sweeping up of data. IRS also has a history of getting what it wants. But as far as tangible 'wins' here I believe you would have to be dumb to have trusted Coinbase to protect your privacy. They have always been very obviously corporate 'straight-edge' service and very willing to follow every financial rule in an effort to be fully legitimate. Given the amount of capital they raised and their US residency this is all not surprising. So I'm kinda surprised they weren't already handing over every users information... that's a win in my books. But obviously I've viewed them with very low standards.

ironjunkie 9y ago
97% reduction? Not really. Given how the price of BTC/ETH is going up, they will soon have to report pretty much every user that put more than a couple hundred dollars initially.
thisisit 9y ago
Sure it was a victory. But that was not the point of the case. IRS had already agreed to the 97% reduction as seen from the previous post. They went to court because they wanted it to reduce even more. That didn't happen here.
logfromblammo 9y ago
If your intent is to hide something from the government, you really need to only do your business on the black market, with people who are already strongly disincentivized to cooperate with the government. Otherwise, just pay your capital gains tax and feel good about supporting the general welfare, because every last person that depends on being in the good graces of the government in order to earn their living will roll on you in an instant. All you U.S.-based Bitcoin speculators have been paying your capital gains taxes, right?~ If you don't want to realize a taxable gain, never buy anything from the U.S. with it, especially dollars. If you don't want to realize a taxable gain that the IRS will know about, don't buy anything from anyone with an EIN. If you're going to be a criminal, please at least be an intelligent criminal. The only justification the IRS has for invading the privacy of thousands of people is because the stupid criminals are embarrassing them. They estimated only 7-9% of Bitcoiners declare and pay tax on capital gains? So if you don't want Coinbase to be forced to turn over your records, your other option is to volunteer to give them to the IRS yourself. Not much of a choice, but the government wants money, and they prefer to take it from the people who obviously have it, because it's easier. So you illegally conceal, or you legally comply. You can't do it half-assed in either direction. If your intent is the former, you cannot do it through Coinbase, because they must comply to exist. While I unequivocally despise the usual tactics of the government with respect to taxation, they are at least predictable, so anyone who is relying on Coinbase to protect them is acting foolishly.

panarky 9y ago

There's a lot of careful phrasing in this post so I don't think Coinbase is being transparent. 1) "14,000 customers" - the just a one-time demand customers records from a year ago? Coinbase had 13.1 million customers a few weeks ago, and are adding hundreds of thousands more a week. If there's a "97% reduction in the number of customers impacted" does that mean there are 13.1 million * 0.03 = 393,000 are affected? Are they doing ongoing disclosures? 2) Does the $20,000 threshold mean total value when acquired? Or current market value? Total withdrawn to a cryptocurrency address? Total withdrawn to a bank account? If I do 10 buys and 10 sells worth $1,000 each does that qualify?

jstanley 9y ago
It's $20k in any given transaction type. So if you do a total of $20k in buys, or $20k in sells, or deposits, or withdrawals, you are targeted. This is particuarly invasive for people running trading bots, which are likely to have very high transaction volumes but very low profit margins.
stult 9y ago
1) It's only 14k people, for activity between 2013-15. There are likely to be further disclosures for later years, depending on what the IRS finds for the years they are already looking at. They may also request information for more customers in later years if the number of customers that meet their criteria for suspicious activity goes up. Previously the IRS requested info on pretty much anyone, but now after court review the summons has been restricted to the customers with potentially suspicious transactions (see below). 2) According to the court order, the summons requests info for customers “with at least the equivalent of $20,000 in any one transaction type (buy, sell, send, or receive) in any one year during the 2013-2015 period.” Buy and sell transactions of BTC meaning a person put dollars in their account to convert to BTC or took BTC out of their BTC wallet for dollars in their Coinbase account. Whether they then withdrew it from Coinbase to their bank account is irrelevant for tax purposes because they either realized a gain or a loss upon the sale so they had to report it as income if there was a gain. So Coinbase will run a query aggregating the transactions by year, account, customer, and type, then produce all the records for any customer with any item over $20k, except those who had only buy transactions because the summons does not cover people who only bought and held. For send/receive transactions, the $20k will almost certainly be the FMV at the time of the transaction. That is easy enough to calculate based on transaction time, transaction BTC amount, and price of BTC at that time. The FMV should be recorded as a matter of course in Coinbase's ledgers, though I am not an insider so I do not know for certain. I would be very, very surprised if their accountants did not insist on recording that information on some ledger for book purposes anyway. The buy, sell, and withdrawal transaction amounts very definitely are recorded on their ledgers and that amount will simply be the nominal amount at the time because they are denominated in dollars anyway. If you did ten sales worth $10k total, no that wouldn't be covered. Twenty sales worth $20k would be, even if you had a corresponding $20k of buys that netted out to zero gains. In that case, Coinbase will give your info to the IRS who will then take no action because there was no income to report and thus no failure to report it. Which is to say, the IRS can request someone's info, but that does not necessarily mean the IRS will take any action or that the person has done anything wrong. The IRS has simply requested info for people whose activities can be categorized as higher risk for tax evasion. They will then compare the account information with filed tax returns to determine if the person has failed to report any income. Some people will have reported their BTC gains. Others will have no realized gains. Most people will probably fall into those categories. A very few will have very complicated records with lots of BTC sent and received which may require an audit to sort out. Some of those will be legitimate BTC users, others may be using their BTC transactions to disguise complicated financial transactions from the IRS. We'll have to see, though I am interested to see how it all shakes out.