(Bloomberg) — IRS criminal investigators consider cryptocurrencies and non-fungible tokens ripe for fraud, including money laundering, market manipulation and tax evasion — and even celebrities could be caught in an agency investigation .
Digital assets have been a growing concern for government agencies as they become more mainstream, with regulators grappling with how to conduct token police and enforcement activities to deter investors from engaging in criminal activity. .
“We’re only seeing mountains and mountains of fraud in this area,” said special agent Ryan Koerner in charge of the Los Angeles field office in the IRS’s Criminal Investigation Division. The division is entrusted with the task of investigating tax offenses and related financial offences.
At a virtual event hosted by the USC Gould School of Law, Koerner said late Tuesday that celebrities are not immune from criminal investigations by the IRS. “We’re not necessarily looking for celebrities, but when they make a candid or open comment that says ‘Hey, IRS, you should probably see me,’ that’s what we do.”
IRS investigators seized $3.5 billion in cryptocurrency linked to financial crimes during fiscal year 2021, a figure that made up 93% of all assets confiscated by the division in that time frame. The IRS CI ended the year with 80 cases on its list that it was still actively working on where the primary breach was related to crypto, Korner said.
Law enforcement agencies are concerned about a variety of criminal activities. They worry when they see people paying millions of dollars for assets like NFTs that don’t seem to have that kind of inherent value, Korner said. He said that bad actors can extort money from criminal enterprises like drug trafficking for their own benefit.
According to Korner, NFTs and crypto, in general, are ripe for market manipulation, with high-profile investors having the potential to influence asset prices with a single tweet.
Federal agencies have in the past gone after crypto companies that use celebrities to endorse products and illegal activities. Last year, boxer Floyd Mayweather and music producer DJ Khaled settled allegations with the US Securities and Exchange Commission that they failed to disclose that they were paid to promote a scheme through social media campaigns. .
IRS CI is trying to train all its agents on crypto and NFT issues because “this space is the future,” Korner said.
He said the agency is seeking to collaborate and share information with other federal agencies, including the Justice Department, to ensure that everyone is on the same page and stays ahead of criminals.
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