IRS wants court to toss crypto exec’s appeal over bank record summons

The US Internal Revenue Service has asked an appeals court to toss a crypto founder’s plea to quash summonses the tax regulator filed against him, which he alleged was without proper notification.

In a Feb. 10 legal brief to the Fifth Circuit appeals court, the IRS and Department of Justice argued that the court lacked jurisdiction as there was no legal proceeding in the case, which it originally filed in a federal court against crypto founder Rowland Marcus Andrade and his firm, ABTC Corporation.

The IRS said it investigated ABTC Corp to determine whether there were potential violations of financial reporting laws in compliance with the Bank Secrecy Act. The agency said it sought Andrade’s personal financial records, believing he was involved with ABTC — but Andrade argued he was never properly notified about the summonses.

The case stems back to 2021 when the IRS began investigating Andrade. In May 2023, the IRS issued summonses to Bank of America and JPMorgan Chase, seeking financial records related to Andrade and ABTC. Andrade claimed the IRS failed to notify him as required by 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, 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. 

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

In May, the district court denied Andrade’s motion to quash, ruling that the IRS followed RFPA requirements and properly notified him with the second summons issuance. It argued that the case was moot since the banks had already complied with the summonses and turned over the requested records. 

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In August, Andrade appealed the ruling to the Fifth Circuit, requesting a stay to prevent the IRS from reviewing the bank records while the case is under 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 their latest brief.

The case is pending in the Fifth Circuit, with the court deciding whether to accept Andrade’s appeal or uphold the district court ruling.

In 2020, the SEC charged Andrade, then CEO of the NAC Foundation, with conducting an unregistered securities offering of AML Bitcoin, a token that the defendants claimed was a new and improved version of Bitcoin (BTC).

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