Coinbase have always differentiated themselves from other bitcoin start-ups as being the company that plays by the book. They are a US-based wallet and exchange that boast about being fully compliant with all relevant rules and regulations. Anyone who has tried to buy or sell bitcoin on Coinbase recently will be aware of their exhaustive KYC/AML procedures and it is rumoured that at least half of their staff are involved in this endeavour. This air of legitimacy has enabled them to raise over $100 million in VC funding, as many investors feel they are the most likely candidate for a bidding war between the major banks should the popularity of bitcoin continue to rise. Unfortunately, getting into bed with the US government is a double-edged sword. According to ZeroHedge, the Internal Revenue Service (IRS) is now demanding that Coinbase provide it with the identities of all customers who have made a transaction over the past 3 years. Court filings reveal that the IRS are trying to ascertain how much tax Coinbase users owe to the tax collection service. Considering Coinbase have close to 4 million customers, this could prove to be a huge treasure trove of information for the IRS as they seek to uncover unreported crypto-currency profits between 2013 and 2015. Coinbase have always been a mixed blessing when it comes to online gambling. Because the software is easy to use, gamblers who are new to crypto have typically flocked there in their droves. Their exhaustive KYC/AML procedures have also enabled them to work closely with U.S. banks to allow seamless money transfers between Coinbase accounts and regular bank accounts. However, since gambling is a legal grey area in the United States, Coinbase regularly close player accounts if they suspect that they are engaged in online betting activities. Online gamblers who want to cash out their bitcoin have typically had to use middle-man wallets like Mycelium and BreadWallet to hide their activities. The big question is will this IRS investigation be the final nail in the coffin for Coinbase when it comes to online gambling? Will U.S. punters be comfortable knowing that the IRS is potentially tracking all of their bitcoin activities?