IRS CI Targets a Broad Range of Charges in Cryptocurrency Cases

Hot Topics, Offshore Account Update

Posted on January 21, 2022 |

Despite its mainstream acceptance, cryptocurrency is still closely associated with criminal enterprise. The ability to conduct transactions anonymously has made Bitcoin and other cryptocurrencies attractive to individuals and organizations seeking to keep their activities secret, and this in turn has garnered the attention of federal authorities. As New Jersey criminal tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains, the Internal Revenue Service’s Criminal Investigations Division (IRS CI) in particular has recently focused its efforts on targeting market participants for non-tax-related crimes.

IRS CI is Using Fraud and Other Charges to Target Illicit Cryptocurrency Activity

Targeting cryptocurrency-related tax crimes is itself a top priority for IRS CI. The division has made this clear, and it has devoted substantial resources to criminal tax cases and criminal tax audits targeting cryptocurrency investors in recent years. However, IRS CI is not focused solely on uncovering cryptocurrency-related tax evasion. It is leveraging its resources to target market participants for conspiracy, money laundering, securities fraud, wire fraud and other crimes as well.

Investigating cryptocurrency-related tax crimes presents unique challenges for IRS CI. However, cryptocurrency transactions are not as anonymous as they used to be, and IRS CI now has several means of identifying the parties to transactions involving Bitcoin and virtual currencies. The IRS has delivered “education” letters to cryptocurrency investors on multiple occasions, and IRS CI can use “John Doe” summonses and various other investigative tools to obtain investors’ identities from exchanges and other entities.

But, in many cases, IRS CI’s primary concern is not exposing tax-related crimes. In fact, in some cryptocurrency cases, it is not focusing on pursuing tax-related charges at all. Consider these recent examples:

  • On October 18, 2021, IRS CI announced that three targets pled guilty to “various financial crimes” related to their operation of an unlicensed money transmitting business and money laundering operation involving the purchase and sale of Bitcoin.
  • On November 16, 2021, IRS CI announced that a federal court was liquidating approximately $57 million in cryptocurrency seized from an individual who pled guilty to conspiracy charges involving BitConnect.
  • On November 18, 2021, IRS CI announced the arrest of an individual accused of operating multiple fraudulent online investment programs that allowed the individual to fraudulently collect more than $5 million in cryptocurrency from investors.

From conducting fraudulent initial coin offerings (ICOs) to supporting terrorist operations, IRS CI is targeting a broad range of other criminal activities involving the use of cryptocurrency as well. Regardless of the specific allegations involved, these cases have the potential to result in substantial penalties, and those targeted in these cases need to rely on the advice and representation of experienced defense counsel.

Discuss Your Case With New Jersey Criminal Tax Lawyer Kevin E. Thorn

If you are currently under investigation or have concerns about facing scrutiny from IRS CI, we encourage you to contact us promptly for a confidential consultation. To discuss your case with New Jersey criminal tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, call 201-355-8202, email or contact us confidentially online now.

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