The DeFi Education Fund (DEF), a cryptocurrency advocacy group, has submitted an amicus brief to the U.S. Court of Appeals for the First Circuit, emphasising the distinctive nature of blockchain technology in relation to users’ privacy rights under the Fourth Amendment of the U.S. Constitution. This move is in support of James Harper’s appeal against the Internal Revenue Service (IRS) to prevent unfettered access to users’ transaction history on cryptocurrency platforms by the U.S. government. Notably, Harper was among 14,355 Coinbase users whose data was disclosed to the IRS in 2017, leading to an ongoing battle for stronger digital privacy rights.
DEF contends that the Fourth Amendment should be revised to rebalance law enforcement’s investigative powers against an individual’s right to financial privacy in the digital era. The group urges the courts to adapt to the intersection of old legal precedents and new technologies, ensuring the preservation of privacy levels from the era of the Fourth Amendment’s inception:
“When old precedents meet new technology, courts must assure preservation of that degree of privacy against government that existed when the Fourth Amendment was adopted.”
Citing the Carpenter vs. United States case, DEF argues that the Fourth Amendment limits the government’s ability to acquire data from third-party platforms like Coinbase. The group highlights the traceability of cryptocurrency transactions on public ledgers, enabling the connection of real-life identities to pseudonymous addresses. In the case of 14,355 Coinbase users, DEF emphasises that the government’s request impacted the privacy of each user, leading to an extensive and enduring overview of their lives:
““The government’s request in this case therefore implicated every user’s every transaction, now and forever, including their ‘familial, political, professional, religious, and sexual associations. It gave the government a “detailed, encyclopaedic, and effortlessly compiled” synopsis of the lives of Harper and 14,354 others.”
The DeFi Education Fund, dedicated to educating policymakers on decentralised finance benefits and achieving regulatory clarity for the DeFi ecosystem, anticipates that the final decision in Harper vs. Werfel and the Internal Revenue Services will establish a precedent for digital privacy rights and law enforcement measures in the United States.