Coinbase’s CEO, Brian Armstrong, has estimated that it will cost the company between $100,000 and $1 million to defend its customers from what he described as an “overly broad subpoena.”
Last month, a federal judge in San Francisco ruled that Coinbase could be ordered, at the request of the Internal Revenue Service, to provide years of data that would reveal the identities of all its active United States-based users.
The IRS is concerned that some of Coinbase’s customers may have used its service to circumvent or mitigate tax liability. Federal investigators say they need Coinbase’s records to be able to identify some Bitcoin wallets and to check against tax records to make sure Coinbase’s users are paying any and all proper taxes on their Bitcoin-related income.
