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The Role of Bitcoin in Crime: Tax Evasion

Highlighting the role of cryptocurrency in the crime world is not exactly difficult. There have been so many allegations regarding the involvement of digital currencies where criminal activity is concerned. Tax evasion is of particular concern to government officials. The bigger question is whether people are doing this intentionally or if the guidelines are simply not clear enough.

Tax Evasion with Bitcoin

One has to admit that there are far worse threats associated with Bitcoin and crime than tax evasion. Darknet activity and money laundering are two of the more pressing problems which need to be addressed sooner rather than later. That is much easier said than done, though, as such activity continues to take place on a global scale without too many repercussions.

Even so, tax evasion involving Bitcoin and other cryptocurrencies is still a concern. Making a meaningful impact in this regard will be extremely challenging, mainly because governments and tax agencies make their guidelines rather unclear. Even in the US, there is a lot of confusion as to what is going on exactly and how Bitcoin users should go about filing their taxes.

Even though proper tools have been created to aid in this area, tax evasion is still a pretty big issue. For instance, only 807 people in the United States reported crypto for tax purposes throughout 2015. That is an astonishingly low number, especially considering that an estimated 2.8 million individuals in the United States owned cryptocurrency. This only serves to fuel tax evasion concerns, for rather obvious reasons.

Moreover, there is a very interesting statistic confirming many Bitcoin holders are willingly failing to report capital gains on their virtual currency holdings. More specifically, 36% of Bitcoin holders say they did not report such cryptocurrency gains or losses on their 2017 taxes. This apparent intent to evade taxes will not be appreciated by the IRS, which is only to be expected. Speaking of the IRS, the government agency is actively probing cryptocurrency exchanges to determine whether or not people have reported their taxes correctly.

With the Coinbase investigation still ongoing, it will be interesting to see whether any tax evasion can be detected. Exchanges keep detailed logs of users’ transactions, and most trading platforms already report to the IRS or other domestic tax agencies whenever possible. There is still a chance that tax evasion or fraud is unintentional, mainly because of the complicated guidelines in place in the United States as of right now.

Even so, tax evasion involving Bitcoin will remain a topic of debate for quite some time to come. With so many people showing an interest in cryptocurrencies these days, it is only natural that there will be an even stronger focus on ensuring that everyone reports their gains and losses correctly. Achieving an ideal scenario may prove virtually impossible, though, as there will be an increased focus on decentralized trading moving forward. Consequently, reporting will become the sole responsibility of the end user, which may or may not be a good thing.

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US Investor Files Lawsuit Against AT&T Over Cryptocurrency Theft

A U.S.-based cryptocurrency investor and entrepreneur has filed a multi-million-dollar lawsuit against telecommunications firm AT&T. Michael Terpin believes that he became the victim of a theft in which a large amount of digital currency was taken from him due to the company’s negligence. Terpin Believes He Was the Victim of a SIM Swap Fraud Michael Terpin has brought legal action against the U.S. telecommunications provider AT&T. The investor and early cryptocurrency advocate filed a 69-page complaint with the U.S. District Court in Los Angeles. During the document, Terpin claims that a large number of digital coins and tokens were stolen from him on January 7, 2018. It goes on to state that AT&T are guilty of gross negligence and fraud, which resulted in the loss of a substantial amount of cryptocurrency. According to Reuters, AT&T responded via email to the complaint by stating: “We dispute these allegations and look forward to presenting our case in court.” The filing claims that Terpin was the victim of a SIM swap fraud that was made possible by the negligence of AT&T. Such a scam involves fraudsters convincing a mobile phone provider to switch a user’s phone number to another SIM card which is under their control. Scammers can then use the number to reset login information for various accounts, allowing them to access them. Michael Terpin is the co-founder of BitAngels – an early angel group for Bitcoin investors. He also helped to set up the first digital currency fund, the BitAngels/Dapps fund in 2014. Today, Terpin is one of the Alphabit Fund’s top advisers. According to the court documents, a total of three million digital tokens were taken from Terpin. Back in January, these were worth around $23.8 million collectively. The filing also states that Terpin is seeking an additional $200 million in punitive damages. Whatever the outcome of Terpin’s court case, it illustrates the dangers of keeping large amounts of digital assets anywhere but in properly secured cold storage. The precise details of the storage of Terpin’s tokens are not currently known. However, any solution which could be comprised by SIM swap fraud is evidently not secure enough. Terpin’s missing funds join the other $1.2 billion plus of cryptos stolen from poorly secured storage solutions since 2017. The case also highlighted a need for adequate custody services in the cryptocurrency industry. This is seen by many as one of the most important steps to opening cryptocurrencies to a wider group of investors. Many do not have the technical knowledge required to set up totally secure paper wallets. Others simply shirk the responsibility of being the sole participant responsible for the safety of their digital wealth. The industry is responding, however. Already this year, NewsBTC has reported on efforts by Circle, Coinbase, and Blockchain to facilitate secure storage for large net-worth individuals and institutions. Featured image from Shutterstock. The post US Investor Files Lawsuit Against AT&T Over Cryptocurrency Theft appeared first on NewsBTC.

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