IRS sniffing around Coinbase

[deisik]

This will be another legal and a "paper trail" headache for the IRS. Imagine this scenario, I buy $100,000 worth of Bitcoins at Coinbase, transfer them to different addresses using an HD wallet. I gamble some in a sportsbetting website, buy altcoins with some at 3 different altcoin exchanges and then transfer them back to different addresses in my HD wallet. I cash out some using Local Bitcoins for a person to person transaction.

How will the IRS figure that out. Also let us pretend I use VPN + Tor since I am also a dark market user.

A mousetrap never runs after a mouse

They won't necessarily go after you exactly just because you bought $100,000 worth of Bitcoins at Coinbase. They will just sift through the Coinbase records to see who can be caught most easily, pick up a few of those poor fellas, make them into scapegoats and show them on the TV. On the other hand, if you don't live in the US, it seems that you have nothing to worry about so far, I guess. But better be safe than sorry, of course

Yeah this could be all for show and another fear mongering strategy used by the US government to discourage the use of Bitcoins and other cryptocurrencies. It will not be surprising if the ruling banks are trying to put pressure on the government to put a stop or even ban Bitcoin.

Personally, I don't think that it all comes down to fear mongering for the purpose of discouraging the use of Bitcoin as well as other cryptocurrencies, though the elements of such a strategy are clearly exhibiting themselves. I'm more inclined to think that these or similar actions are not directed against Bitcoin itself but rather toward disincentivizing people from evading taxes with it. This is quite in line with what all tax collecting agencies do throughout the world...

Their ultimate aim is to collect taxes not to ban or discourage people from using something

[leopard2]

the difference is that you are surprised when you hear a Swiss bank gave their customer's private information to IRS but about Coinbase you are surprised to hear if they didn't give anything to IRS.

when Coinbase is in US then it is automatically assumed they already give up private information to government agencies.

True. In fact Coinbase never said they offer secrecy. The moment you open an account with an exchange and send them ID, you cannot expect that info to remain confidential.

Any info that is collected from anyone, is collected to be USED and SHARED, not to keep confidential. KYC is not to protect the customer. A customer does not benefit from KYC at all.

But naturally a kid who bought bitcoins from his allowance for 500$ a few years ago, never expected that money to grow 100 fold, and having to worry about Uncle Sam stealing it from him or her. 

[Shiroslullaby]

Honestly I really doubt the IRS would go after anyone who they can't absolutely prove made a huge profit off Bitcoin.
The amount of money/ man hours they would have to invest just wouldn't be worth it to investigate even someone who they believed made a few hundred/ thousand dollars.
They are probably only looking at the accounts they see moving tens or hundreds of thousands of dollars in BTC.

[Searing]

Honestly I really doubt the IRS would go after anyone who they can't absolutely prove made a huge profit off Bitcoin.
The amount of money/ man hours they would have to invest just wouldn't be worth it to investigate even someone who they believed made a few hundred/ thousand dollars.
They are probably only looking at the accounts they see moving tens or hundreds of thousands of dollars in BTC.

With that much info on coinbase can't they just run a blockchain tool and depending on results
just audit you on that info cherry pick who to audit. In USA
with IRS you have to prove you are innocent after the fact. Sure if you are ok on
your taxes no problem. But the FUD on this could be daunting on price if it turns into a
hairball to the press of fun FUD.

[Wind_FURY]

This will be another legal and a "paper trail" headache for the IRS. Imagine this scenario, I buy $100,000 worth of Bitcoins at Coinbase, transfer them to different addresses using an HD wallet. I gamble some in a sportsbetting website, buy altcoins with some at 3 different altcoin exchanges and then transfer them back to different addresses in my HD wallet. I cash out some using Local Bitcoins for a person to person transaction.

How will the IRS figure that out. Also let us pretend I use VPN + Tor since I am also a dark market user.

A mousetrap never runs after a mouse

They won't necessarily go after you exactly just because you bought $100,000 worth of Bitcoins at Coinbase. They will just sift through the Coinbase records to see who can be caught most easily, pick up a few of those poor fellas, make them into scapegoats and show them on the TV. On the other hand, if you don't live in the US, it seems that you have nothing to worry about so far, I guess. But better be safe than sorry, of course

Yeah this could be all for show and another fear mongering strategy used by the US government to discourage the use of Bitcoins and other cryptocurrencies. It will not be surprising if the ruling banks are trying to put pressure on the government to put a stop or even ban Bitcoin.

Personally, I don't think that it all comes down to fear mongering for the purpose of discouraging the use of Bitcoin as well as other cryptocurrencies, though the elements of such a strategy are clearly exhibiting themselves. I'm more inclined to think that these or similar actions are not directed against Bitcoin itself but rather toward disincentivizing people from evading taxes with it. This is quite in line with what all tax collecting agencies do throughout the world...

Their ultimate aim is to collect taxes not to ban or discourage people from using something

But is there really a lot in US Dollars they can collect from the use of Bitcoins? I do not think their ultimate aim is just to collect taxes. When the US government makes moves such as this one, there is always a hidden agenda behind it. Sorry for my distrust but we have seen governments around the world that seek to oppress and take advantage their people even in democratic countries.

[deisik]

This will be another legal and a "paper trail" headache for the IRS. Imagine this scenario, I buy $100,000 worth of Bitcoins at Coinbase, transfer them to different addresses using an HD wallet. I gamble some in a sportsbetting website, buy altcoins with some at 3 different altcoin exchanges and then transfer them back to different addresses in my HD wallet. I cash out some using Local Bitcoins for a person to person transaction.

How will the IRS figure that out. Also let us pretend I use VPN + Tor since I am also a dark market user.

A mousetrap never runs after a mouse

They won't necessarily go after you exactly just because you bought $100,000 worth of Bitcoins at Coinbase. They will just sift through the Coinbase records to see who can be caught most easily, pick up a few of those poor fellas, make them into scapegoats and show them on the TV. On the other hand, if you don't live in the US, it seems that you have nothing to worry about so far, I guess. But better be safe than sorry, of course

Yeah this could be all for show and another fear mongering strategy used by the US government to discourage the use of Bitcoins and other cryptocurrencies. It will not be surprising if the ruling banks are trying to put pressure on the government to put a stop or even ban Bitcoin.

Personally, I don't think that it all comes down to fear mongering for the purpose of discouraging the use of Bitcoin as well as other cryptocurrencies, though the elements of such a strategy are clearly exhibiting themselves. I'm more inclined to think that these or similar actions are not directed against Bitcoin itself but rather toward disincentivizing people from evading taxes with it. This is quite in line with what all tax collecting agencies do throughout the world...

Their ultimate aim is to collect taxes not to ban or discourage people from using something

But is there really a lot in US Dollars they can collect from the use of Bitcoins? I do not think their ultimate aim is just to collect taxes. When the US government makes moves such as this one, there is always a hidden agenda behind it. Sorry for my distrust but we have seen governments around the world that seek to oppress and take advantage their people even in democratic countries.

I myself share your distrust, at least, to a degree

But let's remain impartial and unbiased. If they (the US government) had a hidden agenda behind this matter, we wouldn't see the IRS sniffing around Coinbase but rather the FBI intervening directly in Coinbase operations. These agencies (IRS, FBI, NSA and other alphabet services) are pretty much closed societies themselves, and they don't like sharing info with each other. Therefore, it may be interesting to indulge in conspiracy theories, but the reality is usually more prosaic overall