Why The IRS Sees “Mountains Of Fraud” In Crypto And NFTs

As it grows, the crypto industry and its sectors attract more attention from regulators and political actors. In the United States, this industry seems poised for more hostility from the current administration as it is increasingly compared with illegal activities.

Per a recent Bloomberg report, criminal investigators from the U.S. Internal Revenue Service (IRS) are seeing “mountains and mountains of fraud” allegedly related to crypto and non-fungible tokens (NFTs). Illegal activities include tax evasion, money laundering, and market manipulation.

Special Agent Ryan Korner with the IRS’s criminal investigation division of the Los Angeles area made these affirmations on an event from the USC Gould School of Law. Korner referred to these concerns and talked about the recent involvement of high-profile individuals in the crypto space. The federal agent said:

We’re not necessarily out there looking for celebrities, but when they make a blatant or open comment that says ‘Hey, IRS, you should probably come look at me,’ that’s what we do.

Data shared by Bloomberg indicates that the IRS managed to seize around $3.5 billion in cryptocurrencies due to criminal activities in 2021. This number represents 93% of “all the assets seized by the division” in that fiscal year.

Korner claimed the federal agency still left around 80 open cases suspected to have involved crypto. Furthermore, the federal agent revealed there are concerns about people expending exorbitant amounts of money for digital assets, specifically NFTs.

For Korner, these digital assets “don’t seem to have that kind of inherent value” and believes people might be using them as a tool to launder money obtained by illicit means. Amongst the potential illegal sources of these revenues, the federal agent cited drug trafficking and others.

Crypto Is The Future? How The IRS Is Preparing For That Scenario

In addition, Korner expressed concerns over the alleged ease to manipulate the price of crypto by “high-profile investors”. However, the IRS is making an effort to provide their agents with knowledge on cryptocurrencies, NFTs, and the industry in general because, as the agent said, “this space is the future”.

In that sense, the U.S. federal agency is attempting to increase its capacity to share and receive data from other agencies. According to Bloomberg, this includes the U.S. Justice Department, the goal is to “stay ahead of the criminal”.

As reported by Bitcoinist, socialite Kim Kardashian and boxing champion Floyd Mayweather were sued over their alleged involvement with a crypto project accused of operating as a scam. Called EthereumMax (EMAX), its creators have been blamed for creating a “pump-and-dump” scheme.

As of press time, the crypto total market cap stands at $1.7 trillion with a 3.68% profit in the 4-hour chart.

Crypto total market cap with small gains in the 4-hour chart. Source: Tradingview