IRS Seizes $3.5B in Crypto in FY 2021
The Internal Revenue Service (IRS) seized $3.5 billion in cryptocurrencies during the fiscal year 2021, accounting for 93% of the assets seized during the year.
That’s according to the agency’s annual report on criminal investigations this week, which also outlines some of the more high-profile cybercrimes investigated by the IRS in the past year.
Nearly a third of the seizures in question came from a single case, stemming from the 2015 conviction of Silk Road creator Ross Ulbricht on drug and money laundering charges. “His prosecution left open a billion-dollar question: Where did the money go?” the report says.
The IRS found the money by examining bitcoin transactions and uncovering 54 that had gone undetected, the proceeds of unlawful activity that were stolen in 2012 and 2013. The IRS seized several thousand bitcoins on Nov. 3, 2020. Those seized coins were valued at more than $1 billion the following day.
Read more: Almost $1B in Bitcoin Transferred From eWallet Linked to Dark Web's Silk Road
A few days later, in a separate case, Volodymyr Kvashuk was sentenced to nine years in prison for wire fraud, money laundering and filing false tax returns in a scheme to defraud Microsoft of more than $10 million in gift cards.
The IRS says Kvashuk was a software developer for Microsoft who exploited a vulnerability in the company’s program for testing software for their online store.
Also see: Ex-Microsoft Engineer Guilty of Pilfering $10M in eCurrency
Kvashuk sold the cards on a third-party website in exchange for bitcoin, which he attempted to launder using bitcoin mixing services. That laundered money paid for a $1.6 waterfront property, a Tesla worth $160,000 and a million-dollar investment account.
In April of this year, the IRS charged Roman Sterlingov, a dual Russian-Swedish national, with allegedly operating the longest-running bitcoin money-laundering service on the darknet. Sterlingov, 32, operated Bitcoin Fog since 2011. The service became infamous as a money-laundering service for criminals, moving 1.2 million bitcoin — valued at approximately $335 million at the time of the transactions — over the course of a decade.