Daniel S. Alter is a Shareholder in the New York, NY office of Murphy & McGonigle P.C. and is the WLF Legal Pulse’s Featured Expert Contributor, Legal & Regulatory Challenges for Digital Assets.

According to the United States Court of Appeals for the Fifth Circuit, law enforcement officials do not need a search warrant to get account records from a cryptocurrency exchange.  This past June, in U.S. v. Gratkowski, 2020 WL 3530575 (5th Cir. June 20, 2020), the court ruled that crypto exchange account holders do not have a constitutionally cognizable privacy interest in their records and therefore do not enjoy the search and seizure protections ensured by the Fourth Amendment.  The rationale for the court’s decision both is ironic and raises more questions than it answers.  It is certainly out of step with the Supreme Court’s developing approach to the intersection of Fourth Amendment challenges and rapidly evolving technology.

The defendant in Gratkowski was convicted of possessing child pornography, which he had bought online using bitcoin.  During their investigation, federal authorities used a grand jury subpoena to get Gratkowski’s account records from Coinbase, a leading cryptocurrency exchange.  Those records disclosed that Gratkowski had sent bitcoin to an address associated with a child pornography website.  Based upon that information, the authorities were subsequently able to get a judicial warrant to search Gratkowski’s home and to seize his computer containing the banned pornography.