Bitcoin exchange Coinbase ordered to hand over customer data to IRS

A federal court has ordered Coinbase, which operates the largest U.S. exchange for buying and selling Bitcoins, to hand over information to IRS on more than 14,000 customers suspected of evading taxes. 

The ruling by U.S. Magistrate Judge Jacqueline Scott Corley, calls for Coinbase to provide the tax agency with the name, birth date, address and taxpayer identification number of customers who had the Bitcoin equivalent of $20,000 or more in their accounts in any one year between 2013 and 2015.  

According to Coinbase, the order will only affect its highest transacting clients, roughly 1 percent of its total customer base of roughly 6 million account holder. The IRS originally demanded records of all Coinbase customers.

"In narrowing the scope of the summons, we are pleased that the court acknowledged the privacy rights at stake in this matter," Coinbase spokesman David Farmer said in a blog post.

Coinbase didn't reply to an email request seeking comment. 

The battle between Coinbase and the IRS has festered since 2016, when an analysis the agency did of millions of tax records found that only 800 to 900 taxpayers had filed the required form 8949 to declare capital gains or losses from Bitcoin.

The fight comes as Bitcoin prices are swinging wildly. Earlier this week, the price topped $11,400 before plunging below $10.000, only to jump 10 percent on Friday to $10,905.90. 

"Buying Bitcoin right now is equivalent to buying a tech stock in 1999 or 2000," Brad McMillan, chief investment officer for brokerage firm Commonwealth Financial Network, in a note to clients. "You are paying premium prices for the hot asset. Even if Bitcoin does end up as the default cryptocurrency -- and there are hundreds of competitors, many based on second-generation blockchain technologies that are reportedly better -- that does not mean the current price is justified."

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