The Internal Revenue Service’s criminal investigation division deals with multiple cryptocurrency-related cases. Jim Less of the division stated that the organization would publicize most of these cases, which are tax-related.
Escaping Taxes with Cryptocurrency
Bloomberg Tax reported that some of the division’s cases connect to non-reporting crypto=based transactions and off-ramping (exchanging digital coins for fiat. The investigator confirmed a change within the past three years.
Though money laundering lawsuits dominated, tax cases now account for nearly 50%. Meanwhile, crypto boasts a robust reputation as a vehicle for criminal undertakings, including ransomware and scams. Nevertheless, money laundering has accounted for a lesser part of crypto-related doings (over time).
That comes as blockchain forensic platforms such as Chainalysis introduce sophisticated equipment to track illegal transfers. Also, the Treasury Department agreed that cryptocurrency-money laundering, though still an issue, remained far less effective than fiat-related laundering (at the moment).
Contrarily, methods making crypto smooth to utilize are ushering digital coins’ adoption as a global payment option, whether for receiving paychecks or purchasing sports tickets. Meanwhile, it’s challenging for governments to track the cash receivers as on-chain transfers are pseudonymous.
Nevertheless, Lee confirmed that his department has the tools to track nearly all crypto transfers. Thursday’s annual report from the division revealed details of some of the most fruitful seizures of 2022.
For instance, it arrested Heather Morgan for connection with the 2016 Bitfinex scam event. That represented the largest crypto-related seizure in the division’s history. Less added that the department has seized crypto worth $7 billion since the financial year 2022 started.
Though the crypto’s transparent state remains a boon for regulators, watchdogs have been suspicious of cryptocurrency tools that try to improve crypto users’ transaction privacy. Tornado Cash is among them, and it faced sanctions from the Treasury Department in August due to criminal activity.
That represented the first trade restriction in open-source software. Though most institutions, including Circle and Coinbase, complied with the rules within no time, crypto industry headers remained critical about the move.