The Fourth Amendment does not protect Bitcoin data according to a ruling by the U.S Fifth Circuit Court earlier this month.
Fifth Circuit Court Rules against Bitcoin Data Protection
A Fifth Circuit panel of judges ruled earlier this month that the Fourth Amendment rights in the United States do not apply to transactions carried out with cryptocurrencies via an exchange. The U.S court made this ruling in a case against Richard Gratkowski, a defendant that attempted to take advantage of the Fourth Amendment in an appeal.
The ruling, issued by a three-judge panel from the Fifth Circuit courts, revealed that the U.S government’s Fourth Amendment protection does not apply to Bitcoin transactions used for a crime if they are sent from cryptocurrency exchanges. Gratkowski was charged with subscribing to a child porn website and sending his payment in Bitcoin (BTC) using his Coinbase account.
The Federal Bureau of Investigation (FBI) proceeded to search Gratkowski and discovered some illicit materials at his home. The FBI subpoenaed Coinbase for transaction records following their discovery. Gratkowski then appealed the case, stating that his BTC transaction history should be private and protected by the Fourth Amendment.
Gratkowski specifically wanted to take advantage of the Supreme Court ruling from Carpenter vs. the United States in 2018. In the case vs. Carpenter, the Supreme Court ruled that mobile phone data was personal and, as such, protected by the Fourth Amendment.
However, in the case of Gratkowski, Judge Catharina Haynes cited an old court decision by the Supreme Court in 1939 in the case of the United States v. Miller. In the case vs. Miller, the Supreme Court ruled that the 4th Amendment does not protect bank records. As such, Judge Haynes ruled that since Coinbase is a financial institution, a cryptocurrency exchange that provides Bitcoin users with a way to transfer Bitcoin, it is not much different from a bank. Judge Haynes added that the only difference between Coinbase and traditional banks is that Coinbase deals with virtual currencies while traditional banks handle physical currency.
Should Crypto Data Be Protected?
The other two judges agreed with the ruling of Haynes. The court stated that unlike mobile phone data, Bitcoin and crypto transactions do not provide an intimate insight into a person’s life. The panel further added that crypto transaction data is not viewed as a pervasive or continuous part of the daily life, unlike cellphone data.
While the case is controversial, several cryptocurrency proponents are not sure about how the case will affect other lawsuits in the United States concerning digital currencies.
In the U.S, decisions that are related to the Supreme Court and the Court of Appeals become formalized laws of standards. Other judges in the country will take advantage of the decision made by Judge Haynes when dealing with similar cases in the future.
The Fifth Circuit Court was founded in 1891, and it is one of the 13 American courts of appeal. It is also a branch of the appellate jurisdiction. The Fifth Circuit Court of Appeals presides over cases in Texas, Mississippi, and Louisiana.
If the other judges made contradictory rulings to that of Haynes, then the decision could be appealed again in the future, and the weight of the three-judge panel decision may be tested. At the moment, as far as the Fifth Circuit Court is concerned, Bitcoin data coming from a cryptocurrency exchange, like Bitcoin transactions, is not protected by the Fourth Amendment.
From now on, cryptocurrency enthusiasts will have to wait for additional court rulings that are similar to this case to see if this decision will be valid for an extended period.