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Coinbase Ordered To Report 14,355 Users To the IRS (theverge.com)
Nearly a year after the case was initially filed, Coinbase has been ordered to turn over identifying records for all users who have bought, sold, sent, or received more than $20,000 through their accounts in a single year. The digital asset broker estimates that 14,355 users meet the government's requirements. The Verge reports: For each account, the company has been asked to provide the IRS with the user's name, birth date, address, and taxpayer ID, along with records of all account activity and any associated account statements. The result is both a definitive link to the user's identity and a comprehensive record of everything they've done with their Coinbase account, including other accounts to which they've sent money. The order is significantly narrower than the IRS's initial request, which asked for records on every single Coinbase user over the same period. That request would also have required all communications between Coinbase and the user, a measure the judge ultimately found unnecessarily comprehensive. The government made no claim of suspicion against individual users, but instead argued that the order was justified based on the discrepancy between Coinbase users and U.S. citizens reporting Bitcoin gains to the IRS.
The fatal flaw of blockchain is that all transactions are 100% traceable
The whole point of the blockchain is there is a public, verifiable ledger.
The Daddy casts sleep on the Baby. The Baby resists!
Nope. Whenever you send any money the entire amount gets sent and the change goes to a newly created address. It's impossible to tell which address is the change and which is the actual payment, because the order in the transaction is randomized.
Make ONE association of a transaction to an individual, and then you have ALL transactions that individual has ever made
You can have as many 'wallets' as you want. Some people use a different wallet for every transaction (useful for giving a different address to each customer, and then you can tell which customer paid).
"First they came for the slanderers and i said nothing."
Coinbase user here:
This should not be surprising to any user for two reasons:
1) Most of the *coins* are not anonymous. Or rather, they're not private. The ledgers are public, which means that:
2) You're only anonymous if you *never* do anything that connects to you. And as any Coinbase user knows, you have to supply a bunch of identifying and relatively-hard-to-fake info when you sign up. So as soon as you trade on their platform(s?) you are tying your coins to the info they have on you. If you don't want to give up your privacy in exchange for the services they provide, the time to bring out the pitchforks is during signup. After you give your SSN and/or gov. ID, you can't really feign shock and horror when they supply the info to the IRS just like they warned they might in their ToS. I mean, personally I'm cool with that since I do report my cap. gains to the IRS, but yeah, if you're dodging taxes I can see how this is terrible news. But the answer isn't "hate on Coinbase", it's "pay your damn taxes." Shit, cap. gains are a joke in the US anyways... it's not gonna eat into your mad Bitcoin profits that much to pay them... And if you think it is, read on:
3) There are anonymous ways to cash out BTC (not so sure about ETH or LTC). You'll pay a fat premium for them though, and honestly I can't think of any reason to do so aside from strict adherence to libertarian philosophies or ill-gotten gains. Personally my cryptocurrency involvement has been strictly speculation and all above-board, so I'm already de-anonymized as soon as I buy the coins. But I'll grant you if you mine them the equation might be different... if you do, I can at least see the argument for keeping your identity anonymous, if only because anonymity is a nice thing to have in general.
But yeah, no Coinbase user should be surprised by this. They all but come out and warn you that they'll report to your country's tax agency on demand during signup. You can't be pissed when they go and do just that!
The real litigious bastards...