Supreme Court and Digital Privacy Rights
The U.S. Supreme Court is facing pressure to reconsider a contentious practice by the Internal Revenue Service (IRS) that led to the collection of private data from over 14,000 cryptocurrency users without warrants—a move that could significantly impact digital privacy rights. A pivotal case, Harper v. Faulkender, is now challenging the government’s application of the “third-party doctrine,” a legal principle that has allowed for such warrantless data seizures under the Fourth Amendment.
Legal Challenge and Background
The legal challenge is spearheaded by the New Civil Liberties Alliance (NCLA) and attorney Kannon Shanmugam, who submitted a reply brief to the Supreme Court on June 13. The case revolves around James Harper, a customer of Coinbase, whose financial information was included in an IRS investigation. The brief asserts that the IRS illicitly accessed Harper’s records, alongside those of thousands of other cryptocurrency users, through a dubious “John Doe” summons.
Court Rulings and Third-Party Doctrine
Despite a ruling from the U.S. Court of Appeals for the First Circuit in 2022 allowing Harper to file a lawsuit against the IRS, a federal district court dismissed the case in 2023—a decision that was upheld based on the third-party doctrine. The NCLA argues that this legal precedent, which was designed for specific cases rather than broad data collection, needs reevaluation. The organization urges the court either to limit the doctrine’s application to individual investigations or to eliminate it altogether.
Judicial Concerns and Quotes
This sentiment resonates with broader concerns within the judiciary, notably voiced by Justice Sonia Sotomayor, who has criticized the doctrine as inadequate for the complexities of the digital landscape.
NCLA President Mark Chenoweth highlighted the implications of the case, stating, “The third-party doctrine is a Fourth Amendment abomination. In today’s digital world, individuals are compelled to share their private data with service providers, yet this doesn’t strip them of their rights to that information. Therefore, the government should be required to obtain warrants before accessing such data.”
NCLA Senior Litigation Counsel John Vecchione stressed the importance of the case, asserting that it addresses significant questions regarding Fourth Amendment protections in the context of the digital economy.
Implications for Law Enforcement and Digital Rights
While opponents of restricting the doctrine warn that it could obstruct law enforcement’s ability to combat crime, advocates for digital rights emphasize that comprehensive constitutional safeguards are crucial as cryptocurrencies and decentralized technologies increasingly dominate financial transactions.
