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Bitcoin Exchange Ordered To Give IRS Years of Data On Millions of Users (gizmodo.com)
Last month, instead of asking for data relating to specific individuals suspected of a crime, the Internal Revenue Service (IRS) demanded America's largest Bitcoin service, Coinbase, to provide the identities of all of the firm's U.S. customers who made transactions over a three year period because there is a chance they are avoiding paying taxes on their bitcoin reserves. On Wednesday, a federal judge authorized a summons requiring Coinbase to provide the IRS with those records. Gizmodo reports: Covering the identities and transaction histories of millions of customers, the request is believed to be the largest single attempt to identify tax evaders using virtual currency to date. As a so-called "John Doe" summons, the document targets a particular group or class of taxpayers -- rather than individuals -- the agency has a "reasonable basis" to believe may have broken the law. According to The New York Times, the IRS argued that two cases of tax evasion involving Coinbase combined with Bitcoin's "relatively high level of anonymity" serve as that basis. "There is no allegation in this suit that Coinbase has engaged in any wrongdoing in connection with its virtual currency exchange business," said the Justice Department on Wednesday. "Rather, the IRS uses John Doe summonses to obtain information about possible violations of internal revenue laws by individuals whose identities are unknown." In a statement, Coinbase vowed to fight the summons, which the company's head counsel has previously characterized as a "every, very broad" fishing expedition.
....cash should be used whenever possible.
If somebody had bitcoins, was smart to keep a blockchain in his own computer, and apply some common sense, this is not an issue.
If somebody opened account, provided name other information, then had to realize that their custodian is merely another type of bank, and all of the transactions will be subject to the scrutiny. Just like the regular old fashioned bank.
This is merely a way to scare bitcoin users.
Those who understand bitcoin have enough brain to maintain their anonymity.
It is very likely that I don't understand enough about Bitcoin!
Question 1: Why would anyone who thought that they might not be paying all their US taxes use an exchange based in the USA? Is it something to do with needing to convert the Bitcoins to Dollars so that you can actually spend them?
Question 2: Given that one of the main selling points of Bitcoin is anonymity, why would someone operating an exchange keep any but the barest records? I appreciate that they can't destroy the information now they have been asked for it, but I am trying to grasp why they would put themselves at risk of being in that position by retaining it in the first place?