Virtual currency exchanges and blockchain technology continue to raise novel questions for U.S. courts, including in the application or limitations of privacy rights to blockchain users under criminal prosecution. In the latest development, a federal appeals court has ruled that defendants do not have the type of privacy protections over crypto transactions that require law enforcement to first secure a search warrant. In short, a regular grand jury subpoena was sufficient to obtain the crypto data, resulting in a solid victory for prosecutors.
In United States v. Gratkowski, 964 F.3d 307 (5th Cir. 2020), the Fifth Circuit Court of Appeals held that there is no privacy interest in both Bitcoin blockchain data and Bitcoin transaction history to justify the requirement that law enforcement secure a search warrant first.
In Gratkowski, the Fifth Circuit analyzed whether the Fourth Amendment protected a criminal defendant's privacy interests in data located on a virtual currency exchange and the virtual currency exchange's blockchain. The background is that defendant Gratkowski became the subject of a federal investigation after using Bitcoin to pay for online child pornography. Federal agents were able to identify Gratkowski after analyzing the publicly viewable Bitcoin blockchain to identify a cluster of Bitcoin addresses controlled by the website. The agents then used that information to serve a routine grand jury subpoena on Coinbase for all information on the Coinbase customers whose accounts had sent Bitcoin to any of the addresses...
