Tag: Criminal

New IRS Operation Threatens Crypto Tax Dodgers With Jail

by Cryptobriefing

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A newly launched IRS initiative called Operation Hidden Treasure was announced on Friday as part of a crackdown on widespread crypto tax evasion.

IRS Searching For Telltale Signs of Tax Evasion

Operation Hidden Treasure was announced at a Federal Bar Association presentation on fraud on March 05. The operation is specifically designed to root out people using crypto and virtual currency to evade taxes.

Carolyn Schenck of the IRS stated that the agency was looking for “tax evasion signatures.” These include structuring financial activity in blocks of $10,000 or less in order to fly under the radar of the IRS and its Form 8300 requirements.

While exchanges like Coinbase, for example, report tax information to the IRS with accounts over a certain transaction and balance threshold, the IRS is now training operatives to search for signs that crypto users are willfully avoiding detection.

Schenck stated that the IRS is using specialist vendors and trained agents to analyze and de-anonymize crypto transactions so that they can track and seize crypto in “both a civil and a criminal setting.”

“We see you,” she added, sending a message to traders attempting to evade taxes.

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Jail Time for Crypto Tax Dodgers

IRS Criminal Investigation Division Chief James Lee spoke at the presentation, outlining the consequences of tax evasion.

“People have to know there’s a consequence for being willfully noncompliant,” said Lee, “and that consequence is going to jail.”

If the government cannot prove that tax evasion was deliberate, there are still civil consequences including a 75% penalty on the understated tax.

Solicitor Steve Tosher stated that “We expect to see more referrals for criminal prosecution and assertions of the 75% civil fraud penalty.”

Of course, the crypto tax procedure is notoriously opaque, with many users unclear on how to pay crypto taxes.


For those with undisclosed crypto taxes, consulting a tax lawyer is perhaps the best option. Crypto users would do well to remember that they do not share attorney-client privileges with their accountants, and their accountants could be summoned to testify against them. This is not the case with tax lawyers.

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The IRS recently stated that it’s not necessary to pay taxes on Bitcoin buys made in dollars, offering U.S. citizens a way to reduce their crypto taxes. However, the new operation may mark the dawn of a new era for crypto taxes.

The government has been slow to catch up with the crypto industry, but regulation has finally arrived.

“These transactions are not anonymous,” said Schenck. “We see you.”

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Congress worries crypto used to fund domestic terrorism, Capitol insurrection

by Cointelegraph

A U.S. Congress subcommittee is investigating if domestic extremists are turning to cryptocurrency as a source of funds for their activities.

On Feb. 25, the Subcommittee on National Security, International Development, and Monetary Policy will hold a hearing titled “Dollars Against Democracy: Domestic Terrorist Financing in the Aftermath of Insurrection.” A committee memorandum ahead of the hearing stated that “as scrutiny by traditional banks and payment platforms increases, extremists are turning to solicitations of cryptocurrencies.”

The memorandum lumps cryptocurrencies with other potential avenues for illicit activity financing including crowdfunding, charities, and social media platforms. Two main incidents are used to suggest crypto may have helped fund the Capitol insurrection.

Specifically, on Dec. 8 a French extremist who committed suicide sent 28.15 BTC (worth $522,000 at the time of transfer) to 22 addresses with many belonging to known far-right activists and internet personalities.

More than $250,000 of the BTC he sent went to activist Nick Fuentes who was identified as being at the Capitol during the insurrection, although he expressly denies entering the building.

The other source cited by the memorandum was a live video of the Capitol protest on the video streaming platform Dlive in which the streamer received approximately $222 in cryptocurrency tips. According to the document, the platform has paid out “hundreds of thousands of dollars to extremists since its founding.” The platform was purchased by peer-to-peer file sharing service BitTorrent, which is in turn owned by the Tron Foundation.

However the memo concedes the two incidents are circumstantial evidence and that “it is unknown whether the funds from these Bitcoin transfers or others were used in the planning and execution of the January 6th Trump rally or the Capitol insurrection that followed.”

The committee believes that as traditional finance ramps up the reporting of suspicious activity, future insurrectionists are likely to turn to non-traditional methods to finance their activities. It added that “some of the arrests related to the Jan. 6 attack,” were successful due to the reporting methods banks and other regulated financial institutes employ.

There is still significant push-back to the “cryptocurrency is a criminal’s haven” narrative.

Bitcoin influencer Pierre Rochard responded on Twitter to the memo saying “almost all domestic terrorism happened before Bitcoin was invented. Domestic terrorism is financed by USD.”

Cryptocurrency investor who goes by the title “The Crypto Monk” said that even Pokemon cards would be better for payment than Bitcoin due to the cryptocurrency’s ability to trace funds.