## Facts

- Federal agents investigated a child-pornography website operating as a hidden service on the Tor network.
- Users paid the website in Bitcoin to access and download illegal material.
- Bitcoin transactions are recorded on a public blockchain that reflects sender address, recipient address, and amount transferred.
- Agents used blockchain-analysis tools to identify a cluster of Bitcoin addresses associated with the website and then identified addresses that sent Bitcoin to that cluster.
- Agents served a grand jury subpoena (not a warrant) on Coinbase, a virtual currency exchange, seeking customer information for accounts that transacted with the website’s cluster addresses.
- Coinbase records identified Richard Nikolai Gratkowski as a customer linked to transactions with the website.
- Using that information, agents obtained a warrant to search Gratkowski’s residence, where they found a hard drive containing child pornography and obtained incriminating statements.

## Issues

1. Whether a person has a reasonable expectation of privacy in Bitcoin transaction information recorded on the publicly viewable blockchain.
2. Whether a person has a reasonable expectation of privacy in Bitcoin account and transaction records held by a virtual currency exchange (Coinbase) such that obtaining them by grand jury subpoena constitutes a Fourth Amendment search.
3. Whether, if either acquisition was unlawful, evidence seized under the later residential search warrant should be suppressed as fruit of the poisonous tree.

## Decision

- The Fifth Circuit affirmed the district court’s denial of the motion to suppress.
- The court held Gratkowski had no reasonable expectation of privacy in Bitcoin transaction data recorded on the public blockchain.
- The court held Gratkowski had no reasonable expectation of privacy in Coinbase records because he voluntarily conveyed that information to a third party; obtaining it by grand jury subpoena was not a Fourth Amendment search.
- The court distinguished Carpenter and concluded it did not extend Fourth Amendment protection to either public blockchain data or exchange-held transaction records in this context.
- Because there was no Fourth Amendment search in acquiring the blockchain information or Coinbase records, the subsequent warrant was not tainted, and suppression was unwarranted.

## Legal Principles

- The Fourth Amendment generally does not protect information a person knowingly exposes to the public; publicly broadcast transactional data on the Bitcoin blockchain is not subject to a reasonable expectation of privacy.
- Under the third-party doctrine, a person lacks a reasonable expectation of privacy in records maintained by a financial intermediary when the person voluntarily conveys information to that intermediary; exchange records are treated like bank records for this purpose.
- Carpenter was treated as limited to the distinct privacy concerns raised by long-term, comprehensive location tracking and did not displace application of the third-party doctrine to routine transaction records.
- When initial information gathering does not constitute a Fourth Amendment search, evidence obtained later pursuant to a warrant supported by that information is not suppressed on derivative-evidence grounds.

## Conclusion

The Fifth Circuit held that examining publicly available Bitcoin blockchain data and subpoenaing Coinbase for related customer records did not constitute Fourth Amendment searches, so the resulting residential search warrant and seized evidence were valid and suppression was properly denied.


United States v. Gratkowski, 964 F.3d 307 (5th Cir. 2020)