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Feds Look for Tax Evaders Who Used Bitcoin

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NEW YORK (CNNMoney) — Federal investigators are looking for tax evaders who have used virtual currencies like bitcoin to dodge the IRS.

The Justice Department says a federal court has given the IRS a green light to serve a summons on Coinbase, a San Francisco exchange for digital currency.

The Justice Department says it’s looking for people who conducted transactions with Bitcoin from 2013 to 2015 and didn’t pay tax on their gains.

Coinbase itself is not accused of wrongdoing, but it opposed the petition, citing privacy concerns.

“Although Coinbase’s general practice is to cooperate with properly targeted law enforcement inquires, we are extremely concerned with the indiscriminate breadth of the government’s request,” the exchange said in a blog post last month.

Coinbase did not respond to a request for comment from CNNMoney.

Bitcoin was created in 2009 and is the best-known of the many digital currencies, which are not issued or regulated by any government. The worth is determined by the people buying and selling it. The digital markets have, at times, experienced wild fluctuations in value.

Digital currency is preferred by some people for its perceived anonymity, and it can be used for illegal purchases of drugs and other products. It’s not necessarily as anonymous as cash because Bitcoin can leave a digital footprint allowing investigators to track online activity, like evading taxes.