Nikolas Sargeant
The Internal Revenue Service (IRS) has mounted a strong defense against crypto entrepreneur Rowland Marcus Andrade's attempt to challenge tax summonses, urging a federal appeals court to dismiss his case outright.
In a detailed legal brief submitted to the Fifth Circuit Court of Appeals on February 10, the IRS, backed by the Department of Justice, argued that the court lacks jurisdiction over Andrade's challenge. The agencies maintain that since no formal legal proceeding exists against Andrade, his appeal lacks merit.
Federal Investigation Sparks Privacy Dispute
The controversy stems from an IRS investigation into ABTC Corporation, Andrade's company, regarding potential violations of the Bank Secrecy Act. In May 2023, the IRS issued summonses to major financial institutions Bank of America and JPMorgan Chase, seeking Andrade's financial records.
Andrade contends that the IRS violated the Right to Financial Privacy Act by failing to properly notify him before requesting his records. His legal team discovered the summonses independently and subsequently requested copies from the IRS. In response, the agency reissued the summonses in September 2023 with notifications sent to Andrade's business address, though these notices were returned as undeliverable.
Legal Battle Over Financial Records Access
The case took a significant turn when a district court ruled against Andrade, determining that the IRS had fulfilled RFPA requirements through its reissuance of summonses and notification attempts. The court also noted that since the banks had already complied with the IRS requests, the case was effectively moot.
Broader Context: Crypto Industry vs Regulators
This latest legal challenge adds to Andrade's history of regulatory disputes. In 2020, he faced SEC charges for allegedly conducting an unregistered securities offering through his NAC Foundation, involving a token called AML Bitcoin.
The case highlights broader tensions between cryptocurrency entrepreneurs and federal regulators. Similar conflicts have emerged recently, as evidenced by the Blockchain Association and Texas Blockchain Council's lawsuit against the IRS over new cryptocurrency reporting requirements scheduled for 2027.
As the Fifth Circuit considers whether to hear Andrade's appeal or uphold the lower court's decision, the outcome could influence future interactions between cryptocurrency businesses and federal tax authorities, particularly regarding financial privacy rights and regulatory compliance.
