Published , by Chris Jarrard
Published , by Chris Jarrard
For anyone who is sitting on a pile of bitcoin and is currently committing crimes, you should know that the IRS can and will come for that money. Following a string of seizures from drug and tax avoidance cases, the IRS is currently sitting on various lots of cryptocurrencies that have an estimated value of over $1.2 billion — and that’s just what was seized during the 2021 fiscal year so far.
Much like they would with piles of loose cash or bank accounts tied to criminal enterprises, the IRS is seizing and auctioning off large amounts of cryptocurrency. Along with items like boats, weapons, and real estate, it is not uncommon for law enforcement to seize property as part of sting operations. Once the applicable cases are settled, the property is auctioned off.
“It could be 10 boats, 12 cars, and then one of the lots is X number of bitcoin being auctioned,” Jarod Koopman, director of the IRS’ cybercrime unit, told CNBC. “In fiscal year 2019, we had about $700,000 worth of crypto seizures. In 2020, it was up to $137 million. And so far in 2021, we’re at $1.2 billion.”
Where does the money from the auctioned off lots of cryptocurrency go? Once the adjacent cases are closed and the cryptocurrency is swapped for fiat currency, the funds are then split up amongst government offices. The large majority of these funds go to the Treasury Forfeiture Fund or the Department of Justice Assets Forfeiture Fund. Once it finds its way into one of these two funds, the liquidated crypto can then be put toward a variety of line items. Congress has the power to appropriate the funds and put it toward funding projects.
While things seem fine and dandy for those splitting up the windfall from these crypto seizures, some critics have concerns about a lack of oversight and transparency on the handling and protocols surrounding these funds.
“I don’t believe there’s any one place that has all the crypto that the U.S. Marshals are holding, let alone the different states that may have forfeited crypto. It’s very much a hodgepodge,” explains Alex Lakatos, a partner with DC law firm Mayer Brown, who advises clients on forfeiture. “I don’t even know if someone in the government wanted to get their arms around it, how they would go about doing it.”