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Most cryptocurrencies are pseudonymous, but some users of the digital exchange Coinbase are about to have their identities blown wide open thanks to the Tax Man.

A federal court Wednesday ruled that San Francisco-based Coinbase must turn over identifying information on users that engaged in at least $20,000 worth of transactions via the service in 2013, 2014, or 2015. It seems, the IRS alleges, that not all of them have been reporting their gains to Uncle Sam.

SEE ALSO:IRS targets Coinbase users in an attempt to thwart tax fraud

So reports Bloomberg, which notes that U.S. Magistrate Judge Jacqueline Scott Corley found the IRS's demands to be reasonable. This is a turnaround from 2016, when the IRS asked for customer data spanning from 2013 to 2015. The company called that request overly broad, and in turn the government narrowed its request.

According to the judgement, Coinbase must turn over the following on the customers that fall within the IRS's search parameters: taxpayer ID, name, birth date, address, "records of account activity including transaction logs or other records identifying the date, amount, and type of transaction (purchase/sale/exchange), the post transaction balance, and the names of counterparties to the transaction," and "all periodic statements of account or invoices (or the equivalent)."

Coinbase has in the past estimated that 14,355 users meet the IRS's criteria.

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A company spokesperson declined to comment on the ruling when reached by Mashable, however they did point us to a statement posted to Medium detailing what Coinbase is calling a "partial victory."

"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," wrote Director of Communications David Farmer.

He went on to note that this ruling applies to "less than 1% of our customer base," and that "we intend to notify impacted users in advance of any disclosure."

The cryptocurrency crowd, meanwhile, is not holding back in how it views this decision. Hint: It's not favorable. The Director of Research at Coin Center, a non-profit group that advocates for pro-cryptocurrency public policy, had some particularly choice words.

"While the court granted a narrowed version of the IRS’s original request for Coinbase customer data, we remain deeply unsatisfied with the lack of justification provided by the IRS," wrote Peter Van Valkenburgh. "Without better rationale for why these specific transactions were suspect, a similarly sweeping request could be made for customer data from any financial institution. It sets a bad precedent for financial privacy."

Importantly, this judgement does not effect the majority of Coinbase's customers. It does, however, send a strong message to all of them: What you do on the blockchain might not stay on the blockchain.

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TopicsBitcoinCryptocurrency

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