On Monday, the U.S. Supreme Court refused to reconsider James Harper’s case against the U.S. Internal Revenue Service (IRS) and its officials. This refusal means the lower courts’ decision stands, setting a major precedent for digital privacy rights of U.S. crypto users.
Order list. Source: supremecourt.gov
The story began in 2020 when Harper filed a lawsuit against the IRS. The lawsuit was prompted by Coinbase’s release of user data to the IRS under a so-called John Doe subpoena, which allows the agency to obtain information on unknown taxpayers.
In his original complaint, Harper alleged that the IRS and its officials conducted an “unlawful search and seizure of his private financial information,” violating the Fourth Amendment to the U.S. Constitution. This amendment protects citizens from unreasonable searches and seizures.
The U.S. Court for the District of New Hampshire dismissed the case in March 2021. Harper appealed to the First Circuit Court, which also ruled against him. Now that the Supreme Court has refused to hear the case, there are no further avenues for appeal.
Coinbase filed a letter and briefing package in support of Harper’s petition.
Source: X/iampaulgrewal
The exchange warned that, should the lower court ruling stand, the U.S. government could “trace users’ every crypto transaction in the past and monitor every crypto transaction in the future.”
We believe in tax compliance, but this goes far beyond a narrow and tailored request and far beyond crypto. This applies to banks, phone companies, ISPs, email, you name it. As we explain here, you should have the same right to privacy for your inbox or account as you have for a…
— paulgrewal.eth (@iampaulgrewal) April 30, 2025
Meanwhile, crypto users are already experiencing increased scrutiny from the IRS regarding digital assets. CoinLedger, a crypto software company, reported a 758% increase in its users mentioning IRS letters in support chats in 2025.
This represents a significant increase in IRS correspondence related to digital asset transactions. Although the company presented the data before the Supreme Court denied Harper’s petition, it already hinted at the impact on user privacy.
“[IRS Letters] don’t necessarily indicate wrongdoing,” said CoinLedger. “In many cases, recipients are simply crypto investors known to the IRS through John Doe Summons issued to exchanges like Coinbase and Poloniex.”
The Supreme Court’s decision effectively legitimizes the IRS’s current practice of collecting crypto transaction data, leaving millions of American crypto investors without additional protection for their financial data.
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