On February 29, 2024, the U.S. House of Representatives Financial Services Committee passed a resolution (H.J. Res. 109) which, if enacted, would undo the recent US Security and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 121 (“SAB 121”). It acted under the Congressional Review Act (“CRA”), which allows Congress to use their oversight authority to overturn rules issued by federal agencies. SAB 121 requires reporting entities which perform custodial duties in relation to crypto assets…
On January 16, 2024, the United States Internal Revenue Service and Treasury Department announced the delay of the reporting requirements for businesses who receive USD 10,000 or more in digital assets, pursuant to section 6050I. Section 6050I obligates any person who receives USD 10,000 or more in cash, in the course of their trade or business, in a single or multiple related transactions, to report such to the IRS using Form 8300. Form 8300 requires…
About two years ago, we wrote a post about actions being taken by the U.S. Internal Revenue Service (“IRS”) in connection with its concern that cryptocurrency owners were underreporting or failing to report gains. One such action was the use of John Doe summonses. The IRS issues a John Doe summons when it wants to obtain information about a group of unidentified taxpayers where it suspects many are non-compliant. If successful, a John Doe summons…
On May 19, 2023, the United States Department of Justice charged a Las Vegas man, Bryan Lee (“Lee”), for his alleged role in the CoinDeal fraud scheme, which involved more than 10,000 victims and $45 million. Lee has been charged with multiple counts of conspiracy, mail fraud, wire fraud and engaging in monetary transactions in criminally derived property. Lee is the third person to be charged by the DOJ in the scheme, after Neil Chandran …
On November 7, 2022, the US Attorney for the Southern District of New York announced that James Zhong (“Zhong”) plead guilty to one count of wire fraud for stealing over 50,000 Bitcoin (valued at the time of seizure at over USD 3.36 billion) from the now defunct Silk Road dark web marketplace. Zhong has not yet been sentenced but could face a maximum of 20 years in prison. This marks yet another major victory for…
In yet another example of the United States government’s commitment to investigate and prosecute crimes involving cryptocurrency, two men from Massachusetts were sentenced on October 19, 2022 for their creation of a scheme with the intent to steal cryptocurrencies from high-profile executives in the crypto community as well as gain access to their social media accounts. Both of the men received sentences of slightly over two years in prison. The two men employed a simple,…
Earlier this month, the United States Department of Justice (DOJ) announced charges against six individuals, in four separate cases, involved in fraudulent crypto related schemes and thereby further highlighted its commitment to protecting investors and consumers. The schemes involved the following alleged fraudulent acts; NFT Fraud (United States v. Le Ahn Tuan): A Vietnamese national and co-conspirators created an NFT called “Baller Ape” and shortly after the first day of trading, engaged in what is…
On February 8, 2022, the U.S. government arrested Ilya Liechtenstein and Heather Morgan and charged them with conspiracy to launder the proceeds of 119,754 Bitcoin which had been stolen from cryptocurrency exchange Bitfinex in a 2016 hack. The present value of the theft is approximately $4.5 billion and the U.S. government has seized approximately 94,000 Bitcoin thus far. The seized Bitcoin is valued at $3.6 billion and represents the DOJ’s largest ever cryptocurrency seizure. The…
On October 6, 2021, the U.S. Department of Justice announced the launch of the National Cryptocurrency Enforcement Team (NCET) “to tackle complex investigations and prosecutions of criminal misuses of cryptocurrency, particularly crimes committed by virtual currency exchanges, mixing and tumbling services, and money laundering infrastructure actors.” Crypto mixing and tumbling services help users reduce traceability by obscuring the sources of their funds. As part of this announcement, the DOJ asserted that cryptocurrency is the “primary…
Introduction On October 8, 2020, the U.S. Department of Justice (“DOJ”) released a Cryptocurrency Enforcement Framework (the “Framework”) authored by the Attorney General’s Cyber Digital Task Force. The Framework is the second detailed report authored by the Cyber-Digital Task Force addressing cryptocurrencies. The Framework provides a self-described comprehensive overview of what the DOJ considers to be emerging threats and enforcement challenges associated with cryptocurrencies. The Framework also details the collaboration that the Department of Justice…