Elon Musk’s X Takes Stand Against IRS in Supreme Court Over Coinbase User Data

Elon Musk’s social media platform, X, has stepped into a legal battle by urging the U.S. Supreme Court to stop law enforcement from compelling companies like cryptocurrency exchange Coinbase to share users’ financial information without a warrant. The move comes as part of a broader push to protect individual privacy rights in an era of expanding government oversight. X Corp., alongside seven researchers and advocacy groups, filed an amicus curiae brief on Friday, spotlighting what they describe as an overreach by the Internal Revenue Service in accessing sensitive customer data.

The case centers on a subpoena issued by the IRS, which allowed the agency to obtain three years of transaction records from Coinbase covering more than 14,000 users, including petitioner James Harper. X argues that this action, conducted without specific suspicion or judicial approval, infringes on constitutional protections. The Supreme Court took notice and, on Monday, directed the federal government to provide a response, as noted in its petition docket.

Privacy Rights at the Core of the Dispute

The controversy traces back to 2020 when Harper launched a lawsuit against the IRS, claiming the agency unlawfully seized data that identified him as a cryptocurrency holder. He asserted that the broad sweep of records violated his Fourth Amendment rights, which guard against unreasonable searches and seizures. X Corp.’s brief echoes this sentiment, stating that the IRS’s use of a sweeping subpoena to gather a large volume of Coinbase records lacked the individualized basis required by law.

Despite Harper’s efforts, a federal court in 2023 upheld the IRS’s actions, ruling that the agency operated within its legal authority when it accessed the Coinbase data. This decision prompted X and its allies to escalate the matter to the Supreme Court, framing it as a critical test of privacy in the digital age. They contend that so-called “suspicionless” subpoenas set a dangerous precedent, allowing government agencies to collect vast amounts of personal information without clear justification.

The involvement of X, a platform known for its vocal leadership under Musk, adds a high-profile dimension to the case. The company’s stance reflects growing concerns among tech firms and privacy advocates about the balance between law enforcement needs and individual rights. As cryptocurrency usage rises, exchanges like Coinbase have become focal points for regulatory scrutiny, often caught between complying with government requests and safeguarding user trust.

In addition, the parallels to the Roger Ver case are striking, as both involve the IRS targeting cryptocurrency users and raising allegations of government overreach. Ver, a prominent crypto figure, has faced charges of tax evasion, with part of his case hinging on the Department of Justice raiding his lawyers’ offices and seizing attorney-client privileged information. This breach, which undermines a cornerstone of the legal system, mirrors the privacy violations Harper alleges, highlighting a pattern of the government sidestepping due process to access sensitive data in crypto-related cases.

For now, the Supreme Court’s request for a federal response signals that the issue warrants further examination. The outcome could reshape how agencies like the IRS approach data collection, particularly in industries where financial privacy is a cornerstone. Harper’s challenge, backed by Elon Musk, X, and others, highlights a broader debate about privacy and the limits of government power in an increasingly connected world.