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ACTIVE/91877033.6

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Case No. 3:17-CV-01431-JSC

G o o d w i n P r o c t e r L L P

6 0 1 S F i g u e r o a S t r e e t , 4 1 s t F l o o r L o s A n g e l e s , C A 9 0 0 1 7

MICHAEL T. LEMPRES (SBN 120823)

mike.lempres@coinbase.com

JUAN A. SUAREZ (SBN 268859)

juan@coinbase.com

COINBASE, INC.

548 Market Street, #23008 San Francisco, CA 94104 Tel.: 415.275.2890 STEVEN A. ELLIS (SBN 171742)

sellis@goodwinlaw.com

SHAUNA E. WOODS (SBN 300339)

swoods@goodwinlaw.com

GOODWIN PROCTER

LLP

601 S. Figueroa Street, 41st Floor Los Angeles, CA 90017 Tel.: 213.426.2500 Fax.: 213.623.1673 GRANT P. FONDO (SBN 181530)

gfondo@goodwinlaw.com

GOODWIN PROCTER

LLP

135 Commonwealth Drive Menlo Park, CA 94025-1105 Tel.: 650.752.3100 Fax.: 650.853.1038 Attorneys for Respondent: COINBASE, INC.

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION

UNITED STATES OF AMERICA, Petitioner, v. COINBASE, INC., Respondent. Case No. 3:17-cv-01431-JSC

RESPONDENT COINBASE, INC.’S OPPOSITION TO PETITION TO ENFORCE INTERNAL REVENUE SERVICE SUMMONS

Courtroom: F (15th Floor) Judge: Hon. Jacqueline Scott Corley

Case 3:17-cv-01431-JSC Document 46 Filed 07/27/17 Page 1 of 30

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TABLE OF CONTENTS Page

INTRODUCTION ..............................................................................................................................1

BACKGROUND AND PROCEDURAL HISTORY ........................................................................2

A.

Two Government Reports Criticize The IRS’s Inaction On Digital Currency ..........2

B.

Rather Than Address Its Policy Failings, The IRS Applies

Ex Parte

For An Order Permitting Service Of A Massive John Doe Summons on Coinbase ..............4

C.

The IRS Brings This Enforcement Action .................................................................4

D.

The Court Sets A Briefing Schedule ..........................................................................5

E.

Members of Congress Criticize The IRS For Its Broad Summons To Coinbase .....................................................................................................................6

F.

The Court Holds A Hearing On The Intervention Motion .........................................6

G.

IRS Files Notice of Narrowing of Summons .............................................................7

H.

Court Grants Intervention Motion ..............................................................................8

ARGUMENT .....................................................................................................................................8

I.

As A Threshold Matter, The IRS Has Not Demonstrated That It Is Acting To Further A Proper Enforcement Purpose. ..............................................................................10

II.

The IRS Has Not Shown That The Modified Summons, Which Requests More Than 8.9 Million Transaction Records And Other Information From 14,355 Accounts, Seeks Information That Is Relevant To The IRS’s Purpose ...............................15

A.

The Modified Summons Is Substantially Overbroad. ..............................................15

B.

The IRS Has Only An “Idle Hope,” And Not A “Realistic Expectation” That The Information Sought Will Promote Proper Enforcement Purposes. ..........21

C.

The Narrowing Of The Summons, Although Welcome, Does Not Cure The Summons Of Its Overbreadth ...................................................................................22

III.

The Petition Should Be Denied Because Enforcement Of The Summons Would Be An Abuse Of The Court’s Process .......................................................................................24

IV.

Coinbase Requests An Evidentiary Hearing ........................................................................24

CONCLUSION ................................................................................................................................25


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TABLE OF AUTHORITIES Page(s) Federal Cases

David H. Tedder & Assocs. v. U.S.

, 77 F.3d 1166 (9th Cir. 1996) ................................................................................................15, 22

Matter of Oil and Gas Producers Having Processing Agreements with Kerr- McGee Corp.

, 500 F. Supp. 440 (W.D. Okla. 1980) .........................................................................................24

In re Tax Liabilities of John Does (Agricultural Asset Mgmt Co.)

, 688 F.2d 144 (2d Cir. 1982) .......................................................................................................17

In re Tax Liabilities of John Does (Mastercard Payment Cards)

, 2002 WL 32881074 (S.D. Fla. Oct. 31, 2002) ...........................................................................17

U.S. v. Arthur Young & Co.

, 465 U.S. 805 (1984) ...................................................................................................................15

United States v. Bisceglia

, 420 U.S. 141 (1975) ...........................................................................................................

passim

United States v. Church of Scientology

, 520 F.2d 818 (9th Cir. 1975) ..................................................................................................9, 24

United States v. Donovan

, 429 U.S. 413 (1977) ...................................................................................................................10

United States v. Goldman

, 637 F.2d 664 (9th Cir. 1980) ....................................................................................10, 15, 21, 22

United States v. Humble Oil & Refining Co.

, 488 F.2d 953 (5th Cir. 1974) ......................................................................................................11

United States v. Kis

, 658 F.2d 526 (7th Cir. 1981) ......................................................................................................24

United States v. LaSalle Nat’l Bank

, 437 U.S. 298 (1978) ...............................................................................................................9, 24

United States v. Microsoft Corp.

, No. 2:15-CV-00102-RSM, 2015 WL 4496749 (W.D. Wash. June 17, 2015) ...........................24

United States v. Mutschler & Assocs

., 734 F.2d 363 (8th Cir. 1984) ......................................................................................................17

United States v. Powell

, 379 U.S. 48 (1964) ...........................................................................................................9, 22, 24

United States v. Samuels, Kramer & Co.

, 712 F.2d 1342 (9th Cir. 1983) ....................................................................................9, 10, 17, 24
