WASHINGTON – A federal court in California has accepted a controversial request from the IRS to obtain the records of possibly millions of users of the bitcoin exchange Coinbase.

In an order published Wednesday, California Northern District Judge Jacqueline Scott Corley granted the IRS's request for a so-called John Doe summons, which allows the agency to seek out information on unspecified individuals.

"The Court has determined … that there is a reasonable basis for believing that [the broad category of bitcoin users sought out by the IRS] has failed or may have failed to comply with any provision of any internal revenue laws," the judge wrote.

The IRS's John Doe summons request, filed in November, created a backlash among virtual currency advocates, who charged it was far too broad. The IRS is seeking to obtain Coinbase's data on all users who engaged in virtual currency transactions from 2013 to 2015. The company has accumulated nearly 5 million users, according to its website.

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Lalita Clozel

Lalita Clozel covers fintech regulation, anti-money-laundering, cybersecurity and the Federal Deposit Insurance Corp. in American Banker's Washington bureau.