US IRS Can Issue Summons to Bank Serving Crypto Broker SFOX Customers in Search of Tax Evaders

The John Doe summons will require M.Y. Safra Bank to provide information about SFOX customers who used the bank and may owe taxes on crypto transactions.

AccessTimeIconSep 23, 2022 at 2:57 a.m. UTC
Updated May 11, 2023 at 6:41 p.m. UTC

The Internal Revenue Service (IRS) can issue a "John Doe" summons to a bank that provided services for customers of cryptocurrency prime broker SFOX, a U.S. District Court judge in New York ordered Thursday. The ruling will allow the federal tax agency to continue looking for potential tax evaders in an ongoing probe.

The summons requires M.Y. Safra Bank to provide information about the SFOX customers who may not have reported and paid taxes on crypto transactions. In August, the IRS received authorization from a California judge to serve a "John Doe" summons on SFOX itself.

“The government’s ability to obtain third-party information on those failing to report their gains from digital assets remains a critical tool in catching tax cheats," IRS Commissioner Charles P. Rettig said in a U.S. Department of Justice (DOJ) press release. "The court’s granting of the John Doe summons reinforces our ongoing, significant efforts to ensure that everyone pays their fair share."

M.Y. Safra Bank is not alleged to have engaged in wrongdoing, the DOJ release said.

The IRS has previously served such summons's on companies like Kraken and Circle, and typically does so when it wants to confirm whether the recipient's customers are properly reporting their taxes. Cryptocurrency transactions are taxed like property, with the IRS collecting capital gains tax on every transaction.

The California judge's ruling authorized the IRS to serve a summons against SFOX, asking for information about any "U.S. taxpayers who conducted at least the equivalent of $20,000 in transactions in cryptocurrency between 2016 and 2021 with or through SFOX. SFOX will be required to share any records identifying those users and their transactions through the service.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

James Rubin is CoinDesk's U.S. news editor based on the West Coast.

Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.