Levitt v. U.S. Internal Revenue Service

On June 24, 2025, cryptocurrency investor Joshua Levitt filed a federal lawsuit against the IRS in the U.S. District Court for the District of Columbia. Levitt challenged the final Treasury regulations issued in late 2024 that classified decentralized finance (DeFi) front‑end operators as “brokers,” compelling them to collect and report user identities and digital asset transaction data. The complaint alleged that the rule exceeded the IRS’s statutory authority under the Internal Revenue Code, unlawfully expanded the definition of “broker” to software developers, and violated the Fourth Amendment by effecting a warrantless search of sensitive financial information. Levitt sought declaratory and injunctive relief, arguing that the reporting mandate would stifle innovation, expose millions of users to privacy breaches, and impose impossible compliance burdens on decentralized protocols. The case quickly became a bellwether for the conflict between tax enforcement and blockchain privacy.

As of June 2026, the district court has granted a preliminary injunction blocking enforcement of the broker rule against DeFi front‑ends. The government appealed to the D.C. Circuit, and a final decision is pending.

Whether the IRS’s classification of DeFi front‑end operators as “brokers” exceeds its statutory authority under the Administrative Procedure Act and violates the Fourth Amendment’s protection against unreasonable searches.

The case intensified the national debate over the regulation of decentralized technologies. It spurred bipartisan legislative efforts to craft a tailored DeFi reporting framework, emboldened privacy advocates, and forced the IRS to reconsider its approach to digital asset tax compliance. The litigation also influenced market behavior, with several DeFi protocols restricting U.S. users pending clarity.