W.D.Wash.: No reasonable expectation of privacy in Bitcoin records

There is no reasonable expectation of privacy in Bitcoin records. Zietzke v. United States, 2019 U.S. Dist. LEXIS 204274 (W.D. Wash. Nov. 25, 2019):

In United States v. Miller, 425 U.S. 435, 440-43, 96 S. Ct. 1619, 48 L. Ed. 2d 71 (1976), the Supreme Court held that a person lacks a reasonable expectation of privacy in a bank’s records pertaining to the person. The Miller Court based its holding on two distinct grounds. First, citing its third-party exposure cases, the Supreme Court stated that “the Fourth Amendment does not prohibit the obtaining of information revealed to a third party and conveyed by him to Government authorities.” Id. at 443 (citing United States v. White, 401 U.S. 745, 752, 91 S. Ct. 1122, 28 L. Ed. 2d 453 (1971); Hoffa v. United States, 385 U.S. 293, 302, 87 S. Ct. 408, 17 L. Ed. 2d 374 (1966); Lopez v. United States, 373 U.S. 427, 83 S. Ct. 1381, 10 L. Ed. 2d 462 (1963)). Second, the Supreme Court observed that bank records “[were] not the respondent’s ‘private papers'” but were instead “the business records of the banks.” Id. at 440. Accordingly, the Government could subpoena those records without infringing on the respondent’s Fourth Amendment rights. Id. at 444.

In Carpenter v. United States, 138 S. Ct. 2206, 2217, 201 L. Ed. 2d 507 & n.3 (2018), the Supreme Court distinguished Miller and held that a person has a reasonable expectation of privacy in seven days of historical cell-site location information (CSLI) produced by their cell phone. Although CSLI is revealed to and owned by wireless carriers, the Carpenter majority held that these factors did not necessarily render a person’s expectation of privacy in CSLI unreasonable. Id. at 2219. Instead, the majority concluded that it must consider “‘the nature of the particular documents sought’ to determine whether ‘there is a legitimate “expectation of privacy” concerning their contents.'” Id. (quoting Miller, 425 U.S. at 442). The nature of CSLI is especially revealing, the majority reasoned, because “time-stamped data provides an intimate window into a person’s life, revealing not only his particular movements, but through them his ‘familial, political, professional, religious, and sexual associations.'” Id. at 2217-18 (quoting United States v. Jones, 565 U.S. 400, 415, 132 S. Ct. 945, 181 L. Ed. 2d 911 (2012)). And given CSLI’s revealing nature, the majority held that people retain an “expectation of privacy in the whole of their physical movements” even after they give data about those movements to wireless carriers. Id. at 2219.

Petitioner asks the Court to extend Carpenter to this case and hold that Petitioner has a reasonable expectation of privacy in Bitstamp’s cryptocurrency records pertaining to him. (See Dkt. No. 23 at 19.) This request places the Court in the somewhat unenviable position of trying to reconcile Miller and Carpenter to determine what makes a person’s expectation of privacy in bank records less reasonable than their expectation of privacy in CSLI. Unfortunately, lower courts trying to make that determination were given little guidance by the Carpenter majority. For while the majority said that “[t]here is a world of difference” between bank records and CSLI, Carpenter, 138 S. Ct. at 2219, the majority chose to not respond to Justice Kennedy’s observation that bank records can reveal “how much money [persons] make; the political and religious organizations to which they donate; whether they have visited a psychiatrist, plastic surgeon, abortion clinic, or AIDs treatment center; whether they go to gay bars or straight ones; and who are their closest friends and family members,” id. at 2232 (Kennedy, J., dissenting).
Despite this lack of guidance, the Carpenter majority did make two points that are instructive here. First, the majority stated that its decision was “a narrow one” that “did not disturb the application of . . . Miller.” Id. at 2220 (majority opinion). The Court takes this statement seriously, and it will extend Carpenter to new circumstances only if they directly implicate the privacy concerns that animated the majority. Second, the majority was overwhelmingly concerned with “Carpenter’s anticipation of privacy in his physical location.” See id. at 2217-20. In other words, Carpenter was about surveillance. See id. (discussing the Supreme Court’s prior surveillance cases).

These two points compel the conclusion that Carpenter does not apply here. To begin with, this case does not involve surveillance of any kind. It involves a request for financial records. (See Dkt. No. 1.) In addition, those financial records were exposed to and are owned by a third party. (See Dkt. No. 1-1 at 3-15.) Petitioner’s privacy interest in the requested records is, therefore, greatly diminished. See Miller, 425 U.S. at 442-43. And most importantly, the requested records do not implicate Petitioner’s “anticipation of privacy in his physical location” or his “expectation of privacy in the whole of his physical movements.” Carpenter, 138 S. Ct. at 2217, 2219. At most, the records might reveal Petitioner’s “buying and spending history and [his] wealth.” (See Dkt. No. 23 at 21-22.) But that was equally true of the bank records in Miller—records that did not receive Fourth Amendment protection even though, as Justice Kennedy pointed out, those records can reveal “troves of intimate information.” See Carpenter, 138 S. Ct. at 2232 (Kennedy, J., dissenting) (citing Miller, 425 U.S. at 451 (Brennan, J., dissenting)).

Because Bitstamp’s records do not implicate the privacy concerns at issue in Carpenter, Petitioner lacks a legitimate expectation of privacy in those records. Consequently, the IRS’s request for those records does not infringe upon Petitioner’s Fourth Amendment rights. See Miller, 425 U.S. at 441.

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