Coinbase has won a partial victory in their ongoing legal battle with the IRS regarding the disclosure of private user information. According to Coinbase, the government initially sought records on over 500,000 users in their efforts to catch tax cheats. After months of legal wrangling, Coinbase announced that the IRS has reduced their records request to only 14,000 users, a 97% reduction.

Coinbase also announced that the amount of documentation requested by the IRS has been substantially reduced. The company’s blog post did not reveal the criteria used to determine the 14,000 “high volume” users the IRS is interested in. Nor did Coinbase reveal the extent of the documentation that the tax agency is now seeking.

Setting precedents

The partial win for the cryptocurrency exchange is an important step in general cryptocurrency tax consideration. According to Coinbase, most companies simply hand information over to the IRS, but they sought to maintain user privacy:

“Coinbase started this process more than 12 months ago, and while today’s result is not the complete victory we hoped for, it does represent a substantial and unprecedented victory for the industry and the hundreds of thousands of customers that would have been unfairly targeted if it weren’t for our action. Although we are disappointed not to be able to entirely defeat the summons, we are proud to fight for our customers and in the result we were able to achieve as a small company against a large government agency.”

The company promised that, should they be required to submit the requested information on the final 14,000 users, they would inform them before the actual disclosure takes place. The company’s legal staff is currently evaluating the order before proceeding.