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IRS challenges Coinbase customer’s motion to block investigation

The Internal Revenue Service (IRS) is seeking to dismiss the filing by Coinbase customer Jeffrey K. Berns, which sought to block the IRS from accessing personal and transactional information of individuals who used the Coinbase’s platform during 2013-2015.

CoinDesk reported that according to new documents filed in the US District Court of Northern California, the IRS is asking the court to dismiss the filing on the grounds that the request was targeted only for the exchange’s unidentified users.

“On December 13, 2016, Jeffrey K. Berns filed this motion, seeking to intervene, to quash the John Doe summons to Coinbase, for a protective order, or for an order scheduling an evidentiary hearing and permitting discovery. By the underlying motion, movant, Jeffrey K. Berns, has identified himself as covered by the summons to Coinbase. As a result of learning his identity, the IRS has withdrawn the summons as to him and has notified Coinbase that it no longer seeks any records related to him. Consequently, Mr. Berns’ motion is moot and should be dismissed in its entirety”, the document states.

In his filing earlier this month, Berns argued that complying with the IRS’ order would expose private customer data to hackers who would potentially be able to steal the funds, especially when the IRS itself was hacked between 2014 and mid-2015.

In response, the new filing states:

“Mr. Berns is concerned that if the summoned information is put in the hands of government employees that malfeasance will result; seemingly suggesting that IRS employees will use their access to account information to steal virtual currency from account holders… This offensive accusation is not only unfounded, but also totally irrelevant to the inquiry that was before this Court”.

The document also states that Berns is not entitled to conduct discovery or an evidentiary hearing in this summary proceeding. It argues that the proceeding was about issuance and service of the John Doe summons, and so relief in the form of discovery and an evidentiary hearing is not available.

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