93% of IRS criminal investigation seizures involve crypto: report

The United States Internal Revenue Service (IRS) has issued a report which details to what extent cryptocurrencies figure in criminal investigations.

According to the report, 93% of all seizures made by the Criminal Investigations (CI) team involve cryptocurrencies. A total of $3.5 billion in cryptocurrencies was seized by the CI team.

As part of CI’s ongoing effort to combat financial crime, it has spent the past six years establishing a dedicated cybercrime program – the Cyber ​​Crime Unit (CCU) – dedicated to “growth exponential” of cybercrime.

“These crimes almost always involve the use of cryptocurrencies to facilitate criminal activity,” the IRS said in the report.

In the past 12 months alone, cryptocurrencies and crime have made several headlines.

These include far-right extremists raise millions in crypto, Companies supported by Russian intelligence fund election interference campaigns with crypto, and even law enforcement is trying to break privacy coins to solve a missing persons case in Sweden.

The IRS’ Biggest Crypto Cases

The IRS report chronicles some of the largest crypto-related seizures in the history of the organization and the industry.

One example occurred in April this year when a Russian-Swedish national by the name of Roman Sterlingov was arrested on charges relating to his alleged “operation of the oldest Bitcoin darknet money laundering service.

Since 2011, Sterlingov operated a mixing service called Bitcoin Fog. During its operation, Bitcoin Fog moved over 1.2 million Bitcoins, which at the time were valued at around $335 million.

“Most of this cryptocurrency came from darknet markets and was linked to illegal narcotics, computer fraud and abuse activities, and identity theft,” the IRS added.

Another example came in July 2021, when Roger Nils-Jones Karlsson was sentenced to 15 years in prison for money laundering, securities fraud and wire fraud.

“Karlsson ran an investment fraud scheme from 2011 until his arrest in Thailand in June 2019. Karlsson tricked victims into buying shares in the scheme called ‘Eastern Metal Securities’ using cryptocurrency, such as Bitcoin and other online payment platforms,” ​​the IRS said.

But what’s next for the IRS and its role in cracking down on crypto-related crime?

The IRS, Crypto, and the Future

Based on the report’s findings, the IRS has been working hard to tackle a plethora of cryptocurrency-related crimes, but it won’t stop there.

According to Bloombergthis trend is expected to continue.

“I expect a trend of crypto seizures to continue as we move forward into FY22,” IRS Criminal Investigations Chief Jim Lee reportedly said on a call with journalists.

Recently, Congress passed the $1.2 trillion infrastructure bill that for months has caused concern among many crypto enthusiasts. Under the current wording of the bill, node operators and miners would have to report transactions to the IRS, a feat easier said than done.


Subscribe to decryption newsletters!

Get the best stories curated daily, weekly highlights and deep dives straight to your inbox.

Mark M. Gagnon