Bitcoin is not protected by the 4th Amendment, says United States Court
Data collected from the Bitcoin blockchain, such as account balances, has no protection against “unreasonable registration and seizure,” according to a US court.
Bitcoin wallets and “virtual bank accounts” are not entitled to the legal protections of the 4th amendment, according to the United States Court of Appeals for the Fifth Circuit. The ruling comes from a case involving the seizure of the Coinbase account history of a man convicted of child pornography charges.
The ruling, however, shouldn’t come as a surprise, say cryptocurrency attorneys. A panel of US fifth circuit court judges has ruled that Bitcoin account balances are not protected by the 4th Amendment. .
In an ongoing case against a certain Richard Gratkowski, the Louisiana court issued a ruling on July 1 that reaffirmed the view that the balances of Bitcoin accounts should be treated as the balances of bank accounts in criminal proceedings.
Gratkowski, who was convicted of child pornography charges last year, argued that law enforcement’s seizure of his transaction records on the cryptocurrency exchange platform Coinbase violated his constitutional rights set forth in the 4th Amendment.
The ruling dismisses Gratkowski’s appeal and upholds the precedent that Bitcoin account balances should be treated in the same way as bank balances when it comes to search and seizure.
“It’s not a big surprise,” said Stephen Palley, a partner at the Anderson Kill firm. “It is easy to see how a court can conclude that there is no reasonable expectation of privacy on the Bitcoin blockchain, under existing jurisprudence and precedent,” he told Decrypt. “And the Court said Coinbase’s records were more like bank records than cell tower records, which the Supreme Court recently held were protected.”
But whether or not this type of search qualifies as overreaching (both for Bitcoin and traditional bank accounts) is another matter, Palley said.
Preston Byrne, also a partner at Anderson Kill, agreed, adding that Bitcoin transactions are already by design less private than bank accounts.
“You have as reasonable a privacy expectation for the information you put on the Bitcoin blockchain as you do for the information you spray paint on a wall in a downtown building,” he said.
The ruling comes at a time when US regulators and lawmakers have Bitcoin under a microscope. Earlier this week, a bill appeared in Congress to address the use of cryptocurrencies in drug trafficking and other illicit activities. Meanwhile, the IRS continues to search for surveillance tools to more closely monitor transactions made with Bitcoin and other cryptocurrencies.
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