IRS appeals court to uphold crypto executive's summons

The IRS (Internal Revenue Service) is requesting an appeals court to dismiss a plea from crypto founder Rowland Marcus Andrade, who is trying to quash summonses, claiming he wasn't properly notified.

The U.S. tax agency claims it complied with financial privacy laws when it summoned banks for crypto founder Rowland Marcus Andrade's financial records.

In a legal brief submitted on Feb 10 to the Fifth Circuit appeals court, the IRS and Department of Justice (DOJ) argued that the court lacks jurisdiction due to the absence of legal proceedings in the case against Rowland Marcus Andrade and his firm, ABTC Corporation.

The IRS investigated ABTC Corp for potential financial reporting violations under the Bank Secrecy Act, seeking Andrade’s financial records based on his involvement with ABTC.

Andrade claims he was not properly notified about the summonses.

The case began in 2021, with the IRS issuing summonses to Bank of America and JPMorgan Chase in May 2023, seeking financial records of Andrade and ABTC.

Andrade alleges the IRS failed to notify him, violating the Right to Financial Privacy Act (RFPA).

According to court records, Andrade’s attorney discovered the summonses and requested copies from the IRS.

By September 2023, the IRS had sequestered its summonses and issued new ones with notifications mailed to Andrade’s business address, which were returned as undeliverable in October.

Andrade filed a lawsuit in Texas in February 2024 to quash the summonses, claiming the IRS violated financial privacy laws.

In May, the district court denied Andrade’s motion, stating the IRS followed RFPA requirements and properly notified him with the second summons issuance.

The court argued the case was moot since the banks had already complied with the summonses and turned over the requested records.

Andrade appealed to the Fifth Circuit in August, seeking a stay to prevent the IRS from reviewing the bank records during the appeal.

"Because the IRS substantially complied with the RFPA, Andrade is not entitled to damages and attorneys fees, which are contingent upon a statutory violation," the IRS and DOJ argued.

In 2020, the SEC charged Andrade, then CEO of the NAC Foundation, with conducting an unregistered securities offering of AML Bitcoin.

The IRS has been cracking down on crypto tax evasion, arguing that evaders are drawn in by the prospect of "pseudo-anonymity."

In a similar case, the IRS was permitted to hand down summonses to SFOX, a cryptocurrency prime dealer and trading platform.