IRS predicts crypto seizures worth billions of dollars next year

Crypto involved in crimes including tax fraud and money laundering

The US Internal Revenue Service could seize cryptocurrency valued at billions of dollars that is linked to tax fraud and other crimes in the coming year, the agency’s head of criminal investigations said.

The IRS seized $3.5 billion worth of cryptocurrencies in the fiscal year 2021, a figure that accounted for 93 per cent of all the assets seized by tax enforcement that year, an IRS criminal investigation annual report published on Thursday said.

“I expect a trend of crypto seizures to continue as we move forward into fiscal year ‘22,” IRS criminal investigation chief Jim Lee said.

“We’re seeing crypto involved in a number of our crimes as we move forward.”

In the past year, the IRS’s criminal unit seized billions of dollars worth of Bitcoin and other virtual currencies connected to cases involving criminal activities such as wire fraud, money laundering, the distribution of illegal narcotics, and tax fraud.

That included $1bn stolen from Silk Road, an online Bitcoin exchange that was shut down in 2013.

The unit also prosecuted a former Microsoft software developer who used cryptocurrency to hide $10 million he embezzled from the company.

The criminal investigation unit “has prioritised training and the deployment of cryptocurrency, blockchain and open-source intelligence technologies to unravel complex cyber-financial criminal schemes", the report said.

To further those efforts, the unit is opening an advanced collaboration and data centre in Northern Virginia in 2022.

Congress recently granted the IRS more ability to watch over cryptocurrency transactions in the infrastructure package US President Joe Biden signed into law on Monday.

The law will require cryptocurrency brokers to track and report transactions to the IRS in an effort to give tax authorities more visibility into virtual currency trades.

The agency could also benefit from another $80bn in funding that Democrats are proposing in Mr Biden’s Build Back Better plan, which could be voted on in the House as soon as Thursday.

Mr Lee said the money was desperately needed in his unit to hire between 250 and 300 more special agents, and invest in systems to identify and track cyber crimes.

More crypto news

Meanwhile, Crypto.com will replace Staples as the title sponsor of downtown Los Angeles’s arena, the most recent high-profile sponsorship move by the Singapore-based cryptocurrency exchange.

Owned and operated by Anschutz Entertainment Group, the venue will unveil its new name on Christmas day during a Los Angeles Lakers home game, the company said.

The naming rights are rumoured to be worth more than $700m over 20 years.

Updated: November 18th 2021, 7:16 PM
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