The IRS’s Top Crypto Scams of 2023
The IRS recently released a report on the top 10 scams of the year, and four of them are related to cryptocurrencies. OneCoin, a well-known crypto scam, ranked third on the list. Ian Freeman, who helped launder $10 million in proceeds from online scams using Bitcoin, came in fourth. The Silk Road hacker, James Zhong, who stole 50,000 BTC, claimed the seventh spot. Lastly, the cryptocurrency scam Oyster Pearl, launched by Amir Bruno Elmaani in 2017, took eighth place.
It’s important to note that these scams are not new and do not involve crimes committed in 2023. The ranking is based on convictions issued this year for previous events.
The OneCoin Mega-Scam
OneCoin is considered one of the biggest fraud schemes in recent years. Karl Sebastian Greenwood, co-founder of OneCoin along with fugitive Ruja Ignatova, was sentenced to 20 years in prison and ordered to pay approximately $300 million in fines. OneCoin operated as a fraudulent cryptocurrency since 2014, falsely marketed through a global multi-level marketing network. It did not have a real blockchain and was not a public cryptocurrency.
Over several years, millions of people invested over $4 billion in this fraudulent scheme before it was shut down.
Oyster Pearl
Oyster Pearl is another significant crypto scam mentioned by the IRS. Founder Amir Bruno Elmaani, also known as Bruno Block, received a 48-month prison sentence and was fined over $5.5 million for tax offenses. Elmaani launched Oyster Pearl in 2017 with promises of an online data storage platform called Oyster Protocol. However, none of these claims were fulfilled, and the Oyster Protocol smart contract was hacked in 2018.
Elmaani evaded taxes by not filing a tax return for his earnings in 2018 and used the money for personal expenses. The IRS intervened due to this tax evasion.
Other Crypto Scams Connected to Taxes
The IRS primarily focuses on cases related to taxes and unpaid duties. Ian Freeman’s case involved his failure to register his activity with the Financial Crimes Enforcement Network and disabling anti-money laundering features. James Zhong’s case was a theft carried out through hacking, where he stole 50,000 BTC from Silk Road. Despite his attempts to hide his activities, authorities managed to confiscate Bitcoin worth about $3.4 billion from him.
Hot Take: Crypto Scams in the Spotlight
The IRS’s report sheds light on the prevalence of crypto scams and their impact on individuals and the state. OneCoin stands out as a massive fraud scheme that duped millions of people into investing billions of dollars. It serves as a reminder of the need for caution and due diligence when engaging with cryptocurrencies. The cases mentioned by the IRS highlight various forms of crypto-related offenses, including money laundering, tax evasion, and theft. As cryptocurrencies continue to gain popularity, it becomes crucial for regulators and individuals alike to stay vigilant and protect themselves from such scams.
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