Cryptocurrency is digital money. It’s a currency that exists on the internet only, and has no physical form. Cryptocurrencies are not regulated by the government or banks so there is no central authority. Naturally then, it appears as though cybercriminals have chosen this method to remove their dirty money.
In January 2018 for example, hackers compromised the cryptocurrency exchange Coincheck, stealing 500 million NEM tokens from the company’s vulnerable wallet. The total value of the haul was about $534 million, according to the most recent estimates. The attack, which accounted for about a sixth of the $3.7 billion NEM market capitalization, could have destroyed the currency, but Japanese online brokerage firm Monex Group bought the company for about $33 million.
While cybercriminals have frequently used cryptocurrencies as a way to legitimise their multiple illegal plans, they are growingly finding other techniques to include crypto-currencies into their attacks and workings.
To tackle these crimes, the U.S International Revenue Service (IRS) has launched a transactional task force with tax enforcement agencies from four other countries to tackle crypto-related cyber crime, as claimed by its press release on July 2, 2018.
According to United States Internal Revenue Service at IRS.gov, the association has launched an international task force which comprises of tax enforcement agencies from five countries- Canada, Netherlands, Australia, United Kingdom and United States. The new coalition is called, “The Joint Chiefs of Global Tax Enforcement.” It’s cooler, snappier name is J5!
The agencies will work together “to reduce the growing threat to tax administrations posed by cryptocurrencies and cyber crime,” and will aim to remove transnational tax violation and money laundering.According to the IRS, the five countries were motivated to form a transnational task force via J5 after OECD (Organisation for Economic Co-operation and Development) called member countries to increase their efforts against tax crimes committed using cryptocurrencies. The (OECD) is an intergovernmental organization with 35 member countries dedicated to stimulating economic progress and world trade. Cryptocurrencies open the door for tax crimes and are a threat to economic progress and world trade, so it makes sense that the OECD would solicit members to fight cryptocurrency-related tax crimes.
As stated by Don Fort, chief of the Internal Revenue Service-Criminal Investigation (IRS-CI) -which will act side by side the IRS as part of the freshly launched J5 revealed to Forbes that it, “can pressurize the global criminal community in ways we could not achieve on our own.”
The multilateral effort is believed to lessen cryptocurrency-related tax violation throughout the world.
Back in February, the IRS’s Criminal Investigations (IRS-CI) division got involved with cryptocurrencies. The IRS-CI gathered a team of 10 new investigators to tighten its pursuit of those who use cryptocurrencies to evade taxes.
In addition to subjecting cryptocurrencies to federal property taxes, the IRS has also partnered with the US Department of Justice (DOJ) and the FBI in crypto-related criminal cases, including a major charge against listing website Backpage.com. This spring, the site was accused of laundering half a billion dollars in illegitimate revenue, partially through cryptocurrency.
Simultaneously, the IRS has been reportedly using third party blockchain intelligence tools like Chainalysis to track anonymous crypto transactions and crypto enabled crimes since 2017. IRS continues to pursue those who exploit cryptocurrencies for tax evasion. The Joint Chiefs of Global Tax Enforcement (J5) is a continuation of that struggle.
Japanese Cryptocurrency Hacked, $60 Million Losses Reported