[2021-11-18] IRS sees crypto seizures totalling billions of dollars in 2022

[Woodie]

The Internal Revenue Service could seize cryptocurrency valued at billions of dollars that’s linked to tax fraud and other crimes in the coming year, according to a key agency official.

The IRS seized $3.5 billion worth of cryptocurrencies during fiscal year 2021, a figure that accounted for 93% of all the assets seized by tax enforcement that year, according to an IRS criminal investigation annual report published Thursday.

“I expect a trend of crypto seizures to continue as we move forward into fiscal year ‘22,” IRS Criminal Investigation Chief Jim Lee said on a call with reporters. “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, including $1 billion stolen from the Silk Road, an online Bitcoin exchange that was shut down in 2013. The unit also prosecuted a former Microsoft Corp. software developer who used cryptocurrency to hide $10 million he embezzled from the company.

Congress recently granted the IRS more ability to surveil cryptocurrency transactions in the infrastructure package President Joe Biden signed into law on Monday. That law will require crypto brokers to track and report transactions to the IRS in an effort to give tax authorities more visibility into virtual currency trades.

read more https://www.bloomberg.com/news/articles/2021-11-18/irs-sees-crypto-seizures-totaling-billions-of-dollars-next-year

[1713564000]

1713564000

[1713564000]

1713564000

[bbc.reporter]

I have argued on this before, I reckon cryptocoin anonymity will be the next leading issue after the bull market. Everyone will be searching for a solution on how to hide their profit from their governments hehehe. However, there will be solutions available. Monero is a proven altcoin for privacy, grin is being developed and Charlie Lee has declared that Mimblewimble technology will be adoped for litecoin.

[SFR10]

The Internal Revenue Service could seize cryptocurrency valued at billions of dollars that’s linked to tax fraud and other crimes in the coming year, according to a key agency official.

Personally, I have no issue with their main objective but there's a big problem with the manner in which they'd be trying to achieve those results; they'd be unintentionally and inaccurately linking some of the transactions or users to certain crimes that they haven't committed ^{[collateral damage]}!
^{- Btw, I'm referring to some of the techniques they've mentioned previously, as opposed to what's in the above article.}

[NeuroticFish]

I have argued on this before, I reckon cryptocoin anonymity will be the next leading issue after the bull market. Everyone will be searching for a solution on how to hide their profit from their governments hehehe. However, there will be solutions available. Monero is a proven altcoin for privacy, grin is being developed and Charlie Lee has declared that Mimblewimble technology will be adoped for litecoin.

While you are correct, people will most probably keep holding and using bitcoin, since it's more popular and brings higher returns. Also most don't know that bitcoin is not anonymous.
Also way too many of those who know that bitcoin is not anonymous still think that "they have nothing to hide", not gasping the huge importance of anonymity. I hope that people will open their eyes before it's too late.

Litecoin doesn't have Mimblewimble yet; Grin is not known good enough; Monero is not accepted by some of the exchanges...neither of the options would go main stream too quick; still one has also the option of mixing his bitcoin an option you forgot to mention.

[stompix]

However, there will be solutions available. Monero is a proven altcoin for privacy, grin is being developed and Charlie Lee has declared that Mimblewimble technology will be adoped for litecoin.

It doesn't matter how good you can hide your coins and what method you use for it.
The IRS doesn't care if you buy those coins and store them for 6 months or 20 thousand years, they care that you pay the tax of them when you sell and when you transfer your coins for either cash or goods, then no blockchain technology can save your ass if you spend more than the average citizen.

You buy a car the IRS will know, they will see you make 2k a month and you spent 60k on a car, how?
You buy a house 100x times your annual wage, how do you plan on accounting for the funds?

For those who have millions in crypto there are two choices:
- pay the tax and enjoy the rest of the money
- try to avoid the IRS and leave just like before with $30 a day but with the knowledge you have millions in your computer
What would you choose?

[Poker Player]

For those who have millions in crypto there are two choices:
- pay the tax and enjoy the rest of the money
- try to avoid the IRS and leave just like before with $30 a day but with the knowledge you have millions in your computer
What would you choose?

Good analysis but millionaires have more options, like moving to a tax haven with 0 or low taxes for crypto. Transfer the tax residency there, and in the case of people from the USA they should renounce the nationality. For members of other countries it would be enough to change the tax residence there.

Another would be to create a company or network of companies to launder the money but for that it is better to pay taxes and sleep easy, because it also has a cost.

[stompix]

Transfer the tax residency there, and in the case of people from the USA they should renounce the nationality.

Transferring the tax residency doesn't work for the IRS in this case, and second, renounce your nationality?
Common, let's be serious! You have 10 million in BTC and because you don't want to pay 2 million in taxes you're going to flee to..no disrespect for other countries, but seriously? For 20% of your wealth, you're going to say bye-bye to your relatives, friends, and live in a country full of strangers?
Just so you could buy 50 lambos and not only 30?
Besides, nothing guarantees your by tomorrow what's now a tax heaven will still be one.

For members of other countries it would be enough to change the tax residence there.

Doesn't work for EU countries either.

[DaveF]

For members of other countries it would be enough to change the tax residence there.

Doesn't work for EU countries either.

Also the US, it's based on where you received the asset in most places.

The 3.5 billion seems like a large number but it's really not.
As stated 1 billion was from 1 thing and with all the covid restrictions in place a lot of assets that could be seized were not.
2022 is going to see a lot more homes / cars / buildings seized then this year and last yeat.
Bank accounts, brokerage accounts, crypto are easy to do during a pandemic. Other physical things are hard.

-Dave

[Poker Player]

Transfer the tax residency there, and in the case of people from the USA they should renounce the nationality.

Transferring the tax residency doesn't work for the IRS in this case, and second, renounce your nationality?
Common, let's be serious! You have 10 million in BTC and because you don't want to pay 2 million in taxes you're going to flee to..no disrespect for other countries, but seriously? For 20% of your wealth, you're going to say bye-bye to your relatives, friends, and live in a country full of strangers?
Just so you could buy 50 lambos and not only 30?
Besides, nothing guarantees your by tomorrow what's now a tax heaven will still be one.

For members of other countries it would be enough to change the tax residence there.

Doesn't work for EU countries either.

I was talking about options, not that those options are the best thing to do. Leaving your country and renouncing your nationality is not to do things legally according to the IRS it is so that the IRS does not come after you, and as for European countries as soon as you move your tax residency, see how the IRS of the country will come after you.

There is a lot of gray in this. If you leave your country it does not mean that you can never come back, you can spend months even if you have residency somewhere else and you have renounced your nationality.

The objections you raise are similar to what I was saying, that they can create a company or a laundering scheme, but whether it is worth it is another matter.

[Lucius]

Monero is a proven altcoin for privacy, grin is being developed and Charlie Lee has declared that Mimblewimble technology will be adoped for litecoin.

Privacy coins are increasingly under attack from the authorities, they will simply be or have already been banned on some crypto exchanges and that is exactly what happened in my country when the financial supervision regulatory agency requested it from local exchanges. Any coin that enhances user privacy will be potentially at risk of being removed from centralized crypto exchanges.

You buy a car the IRS will know, they will see you make 2k a month and you spent 60k on a car, how?
You buy a house 100x times your annual wage, how do you plan on accounting for the funds?

This will especially happen if you have very jealous and curious neighbors who have the opportunity to report this anonymously to the IRS if they suspect that your property does not match your income. Of course, I say this for those who think that transactions made in cash (no bank/crypto exchange) mean that the IRS will not find out anything, which is true until someone reports you - then prove the origin of the property or be ready to pay taxes.

Although there is a possibility that you can stay intact, all you need is a good lawyer and 6 years. The thing is that the law applies to me that if the procedure is not completed within 6 years of initiation, the matter becomes absolutely obsolete and no one can legally do anything to you.

[bbc.reporter]

I have argued on this before, I reckon cryptocoin anonymity will be the next leading issue after the bull market. Everyone will be searching for a solution on how to hide their profit from their governments hehehe. However, there will be solutions available. Monero is a proven altcoin for privacy, grin is being developed and Charlie Lee has declared that Mimblewimble technology will be adoped for litecoin.

While you are correct, people will most probably keep holding and using bitcoin, since it's more popular and brings higher returns. Also most don't know that bitcoin is not anonymous.
Also way too many of those who know that bitcoin is not anonymous still think that "they have nothing to hide", not gasping the huge importance of anonymity. I hope that people will open their eyes before it's too late.

Litecoin doesn't have Mimblewimble yet; Grin is not known good enough; Monero is not accepted by some of the exchanges...neither of the options would go main stream too quick; still one has also the option of mixing his bitcoin an option you forgot to mention.

Similar to you argument against Monero, mixing is also putting your coins at risk because exchanges can also freeze your account if the see your coins went through a mixer.

The whole idea of my argument is developers will find solutions to problems. I am quite certain there are many developers left who want to fight government’s intervention and proneness to tyranny.

@Lucius. Agreed, it is a problem. There was a whitepaper written by a law firm on a legal framework in the defense of anonymous coins.

https://www.perkinscoie.com/images/content/2/3/v7/237411/Perkins-Coie-LLP-White-Paper-AML-Regulation-of-Privacy-enablin.pdf

In any case, it is head shaking that many people are arguing against anonymous coins. Anonymous coins protect our freedom and privacy if implemented correctly.

[NeuroticFish]

Similar to you argument against Monero, mixing is also putting your coins at risk because exchanges can also freeze your account if the see your coins went through a mixer.

I agree that mixing is also a not 100% perfect solution. And it's not because the horror (stories) of mixing with fraud money (which is rather unlikely, based on statistics), it's as you said, because of certain exchanges' policy, which is also overly inflated (I did sell mixed bitcoin at centralized exchange).
Again, neither solution is perfect. I just wanted to mention one more option you didn't have in your list.
PS. I am quite a fan of Monero and it makes me sad that it doesn't have the success it deserves. I still hope that the world (of crypto) will wake up and stop allow just anybody look into their pockets like it happens now.

The whole idea of my argument is developers will find solutions to problems. I am quite certain there are many developers left who want to fight government’s intervention and proneness to tyranny.

This is a rather complicated thing. As long as Bitcoin has now a great success as it is, doing big steps towards making it privacy oriented may hurt it, possibly even permanently. Bitcoin started getting accepted by the big financial institutions, while Monero gets - now and then - delisted from exchanges. Imho one big component of Bitcoin success is that the agencies have understood that Bitcoin is - in most cases - easy to track.
If you mean that altcoins add more privacy features - that's fine, but won't help much. There's already Monero for proper private coin and its success is rather limited. Litecoin wants to get back into attention - well done - its struggle may be a test ground for Bitcoin as a later move, but don't rely on that too heavily.

[dansus021]

oh oh its happen when FBI seized the famous crypto dark web store "silk road" after seizures the billion dollar worth crypto they will selling like what happened to silk road (* in my opinion the will not sell all in maybe tiny piece or when the candles turn to green)