cryptocurrency

Bitcoin/Cryptocurrency Money Laundering

Published on: April 12, 2023 | By Conaway & Strickler, P.C.

What is Bitcoin money laundering? Bitcoin money laundering is the process of using Bitcoin to conceal the origins of illegally obtained money. This can be done by transferring the Bitcoin to multiple accounts, mixing it with other Bitcoin, or using it to purchase goods or services. Some believe that Bitcoin transactions are anonymous. There are, however, transaction records that are stored in the blockchain and publicly visible. The FBI recently stated “Criminals always leave tracks, and …[this] is a reminder that the FBI has the tools to follow the digital trail, wherever it may lead” .

Bitcoin is definitely attractive to money launderers because it is a decentralized currency that is not subject to government regulation. This makes it difficult, but not impossible, to track and trace Bitcoin transactions. Additionally, Bitcoin is often used in online transactions, which makes it easy to conceal the identity of the sender and receiver.

There are a number of ways to launder money using Bitcoin. One common method is to use a mixer, which is a service that mixes Bitcoin from multiple sources together. This makes it difficult to trace the original source of the Bitcoin. Another method is to use a tumbler, which is a service that breaks up Bitcoin transactions into smaller pieces and then reassembles them. This makes it difficult to track the individual transactions.

Cryptocurrency Fraud

Published on: March 30, 2023 | By Conaway & Strickler, P.C.

We posed some questions about cryptocurrency using Bard (Google’s version of Chat GPT),

First we asked, WHAT IS CRYPTOCURRENCY?

Its response:

How can I be charged with 18 U.S. Code § 1028A Aggravated Identity Theft?

Published on: January 22, 2023 | By Conaway & Strickler, P.C.

Here is the definition from the statute, cut directly from the 11th circuit’s jury instructions:

It’s a Federal crime to commit aggravated identity theft.

The Defendant can be found guilty of aggravated identity theft only if all the following facts are proved beyond a reasonable doubt:

IRS Increased Focus on Cryptocurrency in Operation Hidden Treasure

Published on: May 1, 2021 | By Conaway & Strickler, P.C.

The IRS has just announced that Operation Hidden Treasure will seek to find taxpayers with unreported income from currency transactions. Did you notice the new question on page 1 of the Tax Form 1040? It states, “At any time during 2020 did you receive any financial interest in virtual currency?” Last year this question was only on Schedule 1.

The IRS Criminal Investigation Division (“CID”) will look for typical “flags” in money transactions. That may include “structuring” (transactions in increments of less than $10,000 to avoid reporting requirements), “the use of nominees, shell corps” (entities used solely for moving money around) or “getting on and off the chain.” (On chain transactions – blockchain is modified to reflect the transaction on a public ledger. Off chain transactions are those that that go off the blockchain. They work by swapping private keys to an existing wallet instead of transferring funds.)

The IRS identifies and investigates these tax evasion flags. Operation Hidden Treasure is “all about finding, tracing, and attributing crypto to U.S. Taxpayers.” Do not be fooled into thinking that since it’s cryptocurrency the government does not have the know how to investigate. Charges for tax evasion, false information on a tax return or even money laundering or structuring can be forthcoming. Call Conaway & Strickler, PC if you have had a friendly visit from an IRS CID Agent or if you think you might be facing some issues with the IRS. Carolyn Schenck, national fraud counsel in the IRS Office of Chief Counsel states, “Operation Hidden Treasure is designed to find, trace and attribute such transactions to taxpayers. These transactions are not anonymous. We see you.”