In its latest list of prominent cases for 2023, the Internal Revenue Service’s Criminal Investigation Division called attention to several major cryptocurrency-related crimes that resulted in stiff sentences for the perpetrators. Four of the ten high-profile cases singled out by the IRS involved using cryptocurrencies to carry out tax evasion, money laundering, fraud, and other offenses.
Oyster Pearl: $5.5 million
One fraud case, landing at number eight on the IRS list, takes down the founder of the failed cryptocurrency project, Oyster Pearl. Amir Bruno Elmaani received a four-year prison sentence and must pay over $5.5 million in restitution for tax crimes related to his 2017 ICO promotion of Pearl tokens.
Elmaani suggested the tokens would fund an online data storage platform but instead used the proceeds to purchase yachts, real estate, and other luxuries while failing to pay taxes.
Silk Road’s $3.4 billion crypto seizure
At number seven is the resolution of the years-long saga of James Zhong and the Silk Road dark web marketplace. Zhong was given one year and one day behind bars for a complex scheme to steal 50,000 Bitcoin from Silk Road in 2012 and conceal the funds to avoid detection. Additionally, the forfeiture value of Zhong’s massive crypto hoard totaled approximately $3.4 billion at sentencing.
Bitcoin money laundering scheme: $10 million
Coming in at number four on the IRS list is Ian Freeman’s eight-year sentence for enabling over $10 million in money laundering. In addition, by sidestepping anti-money laundering rules and instructing customers to disguise illicit deposits as church donations, Freeman’s Bitcoin exchange business catered to romance scammers and fraudsters.
Also read: What is the Bitcoin Overflow Bug?
OneCoin: 20 years of prison
Finally, co-founder of the OneCoin Ponzi scheme Karl Sebastian Greenwood received a 20-year sentence and a $300 million forfeiture order for defrauding OneCoin investors out of $4 billion. Alongside partner Ruja Ignatova, Greenwood relied on false claims and a global multi-level marketing structure to perpetrate one of the most brazen cryptocurrency frauds on record.
The capability to track transactions on public blockchains exposes more and more crypto-funded criminal activities. Additionally, law enforcement agencies like the IRS are getting wiser about the pseudo-anonymous nature of cryptocurrencies.
As these cases confirm, hiding behind blockchain technology provides little defense against prosecution for financial schemes bilking victims out of billions. However, they maneuver for a time, and perpetrators still face justice in the end.