IRS Seeks to Dismiss Crypto Executive’s Appeal Over Bank Record Summons

The U.S. Internal Revenue Service (IRS) is asking an appeals court to reject a crypto executive’s attempt to quash the agency’s summonses for his financial records. The case centers around Rowland Marcus Andrade, a cryptocurrency founder, who argues that the IRS improperly sought his personal banking information without giving proper notification, violating his rights under financial privacy laws.

The Legal Dispute

In a legal brief filed on February 10, 2024, with the Fifth Circuit Court of Appeals, the IRS and the U.S. Department of Justice (DOJ) requested the court dismiss Andrade's appeal, stating that there was no legal proceeding that would warrant the court’s intervention. They argued that the court lacked jurisdiction, as the original case was filed in federal court against Andrade and his company, ABTC Corporation, and no formal legal action was required at this stage.

The IRS initiated an investigation into ABTC Corporation, suspecting potential violations of financial reporting laws, including the Bank Secrecy Act. In the course of this investigation, the IRS issued summonses to Andrade’s banks, Bank of America and JPMorgan Chase, to obtain records related to his personal finances and his firm. However, Andrade contended that he had not been properly notified about these summonses, as required by the Right to Financial Privacy Act (RFPA).

Timeline of Events

The legal dispute dates back to 2021, when the IRS first began its investigation into Andrade. In May 2023, the agency issued summonses to Andrade’s banks, seeking his financial records. Andrade argued that the IRS failed to notify him properly about these actions, which is a requirement under the RFPA.

According to court records, Andrade’s attorney discovered the summonses when requesting copies from the IRS. By September 2023, the IRS withdrew the original summonses and issued new ones, this time sending notifications to Andrade’s business address. However, those notifications were returned as undeliverable in October.

In February 2024, Andrade filed a lawsuit in a Texas district court, seeking to quash the summonses. He argued that the IRS violated his financial privacy rights by failing to notify him according to the RFPA.

Court Rulings and Appeals

In May 2024, the district court denied Andrade’s motion to quash the summonses, ruling that the IRS had substantially complied with RFPA requirements. The court found that the second round of summonses, which included proper notification, were sufficient, and ruled the case was moot since the banks had already complied with the summonses and turned over Andrade’s financial records.

Andrade subsequently appealed the decision to the Fifth Circuit, requesting a stay to prevent the IRS from reviewing his bank records while his appeal was pending. In their latest brief, the IRS and DOJ contended that the IRS had substantially complied with the RFPA, and that Andrade was not entitled to damages or attorney’s fees, as these are contingent on proving a statutory violation.

Broader Legal Context

This case is part of a broader legal saga involving Andrade, who has faced regulatory scrutiny in the past. In 2020, the U.S. Securities and Exchange Commission (SEC) charged Andrade, then CEO of the NAC Foundation, with conducting an unregistered securities offering of AML Bitcoin. The SEC alleged that AML Bitcoin, which Andrade and his team promoted as an enhanced version of Bitcoin (BTC), violated securities laws.

What’s Next?

The Fifth Circuit Court of Appeals is now considering whether to accept Andrade’s appeal or uphold the district court’s ruling. The IRS’s request to dismiss the appeal is a key moment in the case, as the outcome could set important precedents for how financial privacy laws are applied in future investigations of cryptocurrency founders and companies.

As the case progresses, the ongoing dispute highlights the tension between cryptocurrency founders’ privacy rights and the IRS's investigative powers, particularly as digital currencies and blockchain technology continue to evolve in the regulatory landscape.