Criminal investigators at the US Internal Revenue Services (IRS) say that virtual currencies and non-fungible tokens (NFTs) is an industry segment that can be exploited by actors engaging in fraudulent activities.
These abusive activities may include actions involving money laundering, market manipulation, and even attempts at tax evasion. It’s worth noting that high-profile celebrities might also get caught up in the IRS‘s extensive investigations.
The cryptocurrency sector has been a serious concern for government entities as they’ve become more widely adopted. Regulatory authorities have been struggling when it comes to effectively monitoring these crypto tokens. During the past few years, regulators have issued many warnings to crypto-related firms like Binance and have cracked down on a wide range of illicit scams involving digital currencies.
Ryan Korner, the Special Agent who’s in charge of the Los Angeles field office at the IRS’s criminal investigation division, noted that they are “just seeing mountains and mountains of fraud in this area.”
The unit is responsible for investigating tax-related criminal activity and other types of financial crimes.
As first reported by BloombergQuint, prominent or influential celebrities aren’t really immune or protected in any way from the IRS’s criminal investigations.
Korner pointed out (during a recently-held discussion hosted by the USC Gould School of Law) that they are “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.”
IRS probes have reportedly managed to seize $3.5 billion in digital currencies that are allegedly linked to various financial crimes during 2021 alone. This is notably a figure that represented around 93% of all assets seized by the unit in that particular time period.
IRS’ CI division reportedly ended 2021 with 80 different cases in its inventory that the agency had still been working on, and where the main violation was linked in some way to virtual currencies, Korner revealed.
Non-fungible tokens (NFTs) and cryptocurrencies are considered ripe or well-suited for market manipulation, Korner claims. There are a number of prominent investors who seem to have the ability to dramatically move market prices with simply one Tweet (like Elon Musk).
Federal authorities have been going after crypto-related firms that have allegedly used celebrities and their enormous influence to back products and illicit activities.
During 2021, former heavyweight boxing champion Floyd Mayweather and hip-hop/rap music producer DJ Khaled had to settle serious charges with the US Securities and Exchange Commission (SEC) which alleged that they had failed to disclose that they were paid in order to promote various schemes.
The IRS CI is now focused on properly training its team on crypto-assets and NFT-related matters since “this space is the future,” Korner stated.
The agency is reportedly focused on increasing its collaboration and information sharing efforts with other authorities, which includes the US Department of Justice, in order to ensure the ecosystem participants (including lawmakers) are all on the same page and are ahead of the bad actors, Korner noted.