The US Supreme Court has thrown out a case involving attorney-client privilege. The cause involves the intent of a law firm to withhold records from prosecutors. The withheld records are related to a client promoting cryptocurrencies as part of a tax investigation.
Law firm loses appeal in crypto-related tax probe
The one-sentence ruling by the judge dismissed the appeal made by the mysterious law firm. The ruling also held the firm in contempt for failing to turn over the records regarding one of its clients as required by a grand jury subpoena.
The court gave this ruling after two weeks of hearing the arguments made regarding the case. The details shared about this case are minimal, as the name of the law firm and the client have been kept private. The anonymity of the involved parties was maintained during the grand jury investigation.
The court records also show that the law firm involved in the case specializes in global tax matters. According to the US Department of Justice, the client represented by this law firm was an early Bitcoin promoter who no longer resides in the United States since 2014.
The law firm was responsible for preparing the Bitcoin promoter’s tax returns. They also offered legal advice on the ways to determine the ownership of crypto assets and value these assets. A subpoena by the grand jury sought access to the records related to how the law firm prepared tax returns on behalf of the client.
In response to the subpoena, the law firm submitted more than 20,000 pages containing the tax records, but it withheld some of them. According to the law firm, it failed to submit additional details as part of the attorney-client privilege.
The court ordered the law firm to submit more records, but the firm declined. According to the firm, these records contained legal and non-legal information on how the company prepared its tax returns. The law firm filed an appeal not to turn over the additional records because of their sensitivity.
The 9th US Circuit Court of Appeals based in San Francisco has upheld the ruling made by the lower court judge, saying that legal advice was the main reason behind the communication needed for an individual to qualify for attorney-client privilege.
Crypto regulations in the United States
The regulatory framework for cryptocurrencies in the United States has undergone numerous changes in recent years. The recent ruling comes as regulators focus on compliance with the tax laws. Crypto investors are required to report their crypto transactions for tax purposes.
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