The DEF argues that under the Fourth Amendment, the government should not have access to data related to citizens’ personal cryptocurrency transactions.

In a landmark case that marks the first time the U.S. Supreme Court has had an opportunity to weigh the Fourth Amendment rights of cryptocurrency users in the context of an IRS investigation, the DeFi Education Fund (DEF) has filed an amicus brief urging the court to consider the unique aspects of crypto when evaluating privacy rights.

The case — IRS v. James Harper — revolves around the government’s order for cryptocurrency exchange Kraken to provide data related to the cryptocurrency trading records of more than 14,000 people, including Harper, for tax enforcement purposes.

Kraken said it sought to fight the order because it believed it was an overreach and that the requests could reveal users’ personal data, such as IP addresses, net worth, employment data and source of wealth.

The outcome of the case is expected to have far-reaching implications for digital privacy and law enforcement.

Fourth Amendment Concerns

The DeFi Education Fund believes that courts must consider the differences between cryptocurrency technology and traditional financial institutions (TradFi) when addressing Fourth Amendment issues.

DEF Chief Legal Officer Amanda Tuminelli said blockchain data allows authorities to gain “in-depth insights into a person’s past, present and future financial life” that were not possible before.

She added that this could violate the Fourth Amendment rights of American citizens.

Tuminelli cited the Supreme Court’s guidance in Kyllo v. United States (2001), which emphasized the importance of maintaining privacy rights in the digital age. She said:

"When old precedents meet new technology, courts must 'ensure that the degree of privacy against the government that existed when the Fourth Amendment was adopted is preserved.'"

The DeFi Education Fund’s amicus brief raises three important considerations for the court’s consideration.

First, it holds that courts should not treat Fourth Amendment protections differently in cases involving information held by third parties.

The group claims that Carpenter v. United States (2018) should be seen as the latest and definitive statement on the “third party” doctrine — effectively limiting the scope of government access to private data.

DEF provides detailed legal analysis in the filing to support its position, emphasizing that the Carpenter ruling reduces the relevance of two older cases that previously formed the basis for the third-party doctrine.

precedent

Those older cases never declared broad and unconditional rules, the brief said, but instead depended on specific restrictions that the government could not prove in this case.

Second, the amicus brief highlights the uniqueness of cryptocurrency transactions, emphasizing that they are different from traditional banking. Unlike traditional banking, cryptocurrency transactions are recorded on a public ledger and can be tracked by anyone.

The DEF claims that government requests for access to cryptocurrency transaction records provide an unprecedented window into users’ financial lives and personal relationships.

The lobby group’s legal arguments delve into the mechanics of cryptocurrency technology, explaining how pseudonymous addresses and blockchain data can enable governments to gain access to vast amounts of information about individuals’ financial activities, associations, and more.

The brief argues that this insight goes far beyond what is possible through traditional bank records.

Finally, the brief cites Supreme Court precedents, such as Kelo v. United States and Carpenter, arguing that courts must adjust their approach to privacy issues in light of evolving technology.

It argues that the government’s ability to conduct unlimited, unrelated transactions through cryptocurrency technology warrants a reassessment of existing Fourth Amendment jurisprudence.

The case has huge implications for the cryptocurrency community and digital privacy advocates. It hinges on the delicate balance between law enforcement investigative powers and individuals’ right to financial privacy in the digital age.

As the Supreme Court prepares to hear the case, the cryptocurrency industry and privacy advocates eagerly await its decision. The final ruling is expected to set a precedent for protecting digital assets and personal information in an evolving technological environment. #DEFI  #法律