International tax authorities have identified more than 50 traces of potential crypto-tax crimes that could lead to official investigations in the coming weeks, including a case that could be a billion-dollar Ponzi scheme.
U.S. tax officials said Friday that they were following separate tracks in fraud focusing on things like non-fungible tokens and other decentralized parts of the industry.
Crypto’s ability to cross borders largely undiscovered has made it a tool for scammers who want to target vulnerable investor populations. It has also led to a series of criminal acts that regulators are trying to attack and control as crypto scammers aim for bigger and richer targets, TheStreet.com reported.
There was also a revival during Russia’s unprovoked invasion of Ukraine. Many people sent money to and from Ukraine via crypto, which in turn proved how currencies could possibly be used.
The money involved appears to have affected investors around the world, including cryptocurrencies in the US, UK, the Netherlands, Canada and Australia.
Senior officials from criminal tax and economic crime from the UK, US, Canada, Australia and the Netherlands, a group known as J5, met in London this week to share intelligence and data to identify sources of cross-border illegal cryptographic activity, Bloomberg reported. . Officials specifically focused on new trends with decentralized funding and non-fungible tokens or NFTs.
“Some of these leads I’m talking about involve people with large NFT transactions related to potential tax or financial crime in our jurisdictions,” Jim Lee, head of the criminal investigation for the Internal Revenue Service, told reporters Friday. A wire “seems to be a billion-dollar Ponzi scheme. It’s a billion with a B, and this lead also affects all the J5 countries.
The initiative highlights growing controls for risk, fraud and abuse in the booming crypto industry. U.S. Treasury Secretary Janet Yellen told lawmakers Thursday that the collapse of the stablecoin TerraUSD has highlighted the need for new regulation.
J5 tax officials have also identified leads involving decentralized exchanges and fintech companies, Lee said. There could be announcements of “significant targets” already this month, he added. Officials declined to give further details about the tracks, which have not yet become active investigations or suggest any official charges.
The identification of potential crimes marks several bad news in what has been a tumultuous week for crypto markets. Large price fluctuations have rattled the crypto markets and lowered the total valuations of cryptocurrencies by about $ 270 billion according to some estimates.
Also see: How a Bitcoin market “in extreme fear” compares to the past and what to expect next time
The ease with which cryptocurrencies can easily cross international borders has necessitated closer cooperation between countries that have struggled to keep up with rapid changes in technology in recent years. The IRS has been committed to making crypto one of the agency’s top enforcement priorities, both nationally and internationally.
“NFTs are one of the new modern digital means of trade-based money laundering,” Niels Obbink of the Dutch tax information and investigation service told reporters. “And since – compared to more well-known conventional sectors – there is less control and less supervision and limited regulation, which makes it vulnerable to fraud, it needs our attention.”