IRS Sees Surge in Crypto Tax Evasion Cases After Binance Probe

Published: Dec 30, 2023
Written By:
Vignesh Karunanidhi
Milk Road Writer

The IRS division that spearheaded the landmark Binance investigation disclosed that nearly half its cryptocurrency probes now center on crypto tax evasion cases rather than money laundering.

Key Details:

  • IRS Criminal Investigation Chief Jim Lee said crypto tax evasion cases jumped from 10% three years ago to around 50% of active digital asset probes.
  • The shift follows the IRS asking about crypto ownership on 2019 tax returns to clamp down on non-compliance.
  • Lee’s division led the Binance probe, which concluded in December with a guilty plea and $4.3 billion settlement over AML and sanctions breaches.

Read more: OKX To Delist Privacy Coins Monero, Zcash And Dash In 2024

Tax Evasion Overtakes Money Laundering Focus

Speaking Monday, Jim Lee explained that only around 10% of his IRS investigators’ crypto work centered on tax issues in 2020. Fast forward three years, and tax cases represent half their active digital asset caseload.

The drastic change in focus highlights tightening oversight by the IRS following years of suspected widespread crypto tax non-compliance. In 2019, the tax agency began asking individuals to disclose if they engaged in cryptocurrency transactions. The question aimed to make tax evasion harder amid the asset class’s growth.

Read more: Singapore Prime Minister Warns Against Crypto Deepfake Scams

Still, the new figures suggest plenty of U.S. crypto users still fail to properly report capital gains, and mining income, or intentionally hide holdings from tax authorities. The IRS Criminal Investigation team is immersed in crypto oversight, including the recent settlement between global exchange Binance, federal agencies, and the Justice Department.

Lee’s division took the helm, negotiating a guilty plea from Binance over anti-money laundering violations, accompanied by a staggering $4.3 billion penalty. They also recovered the $3.6 billion in Bitcoin stolen in the 2016 Bitfinex crypto exchange hack, the largest crypto seizure ever. The cases exemplify the IRS emerging as a key crypto watchdog.

Vignesh Karunanidhi

Vignesh has been a seasoned professional in the crypto space since 2017. He has been writing for over 6 years and specializes in writing and editing various types of crypto content, including news articles, long-form pieces, and blog posts, all focused on sharing the beauty of blockchain and crypto.

Vignesh Karunanidhi
Milk Road Writer
Vignesh has been a seasoned professional in the crypto space since 2017. He has been writing for over 6 years and specializes in writing and editing various types of crypto content, including news articles, long-form pieces, and blog posts, all focused on sharing the beauty of blockchain and crypto.