Tag: cryptocurrency

Governments must tax or ban Bitcoin to maintain deficits: Minneapolis Fed

A recent research paper by the Federal Reserve Bank of Minneapolis suggests that assets such as Bitcoin should be taxed or banned to help governments maintain deficits. 

In an economy where the government tries to maintain permanent deficits using nominal debt, the presence of Bitcoin BTC$66,910 creates problems for policy implementation, the Minneapolis Fed said in a working paper released on Oct. 17.

Bitcoin introduces a “balanced budget trap,” an alternative state where the government is forced to balance its budget, the Fed wrote. 

The researchers used Bitcoin as an example of a fixed-supply “private-sector security” without “real resource claims.” They concluded that it should be banned or taxed to solve the conundrum. 

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FBI Will “Neither Confirm Nor Deny” The Existence Of Bitcoin-Creator Satoshi’s Records

The United States Federal Bureau of Investigation (FBI) has reportedly responded to a Freedom of Information Act (FOIA) request from a journalist implying that Bitcoin creator Satoshi Nakamoto was a “third party individual” for whom it could neither confirm nor deny it had records.

According to an Aug. 13 X post by investigative journalist Dave Troy, the FBI issued a “Glomar response” to his request for information on Satoshi —- neither confirming nor denying the law enforcement agency had records identifying the pseudonymous Bitcoin creator.

Troy said he intended to appeal the FOIA response but claimed the FBI had made an “interesting assertion” by implying Satoshi was a “third party individual.”

“I submitted as a broad general subject request, with full context, so it is the bureau and not me that is asserting that this is an individual,” said Troy. “[M]y intent is not to establish the identity behind the pseudonym, but rather to get what info the bureau may have on the subject. If that helps establish identity somehow, fine, but that’s not my primary question.”

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‘Bitcoin Jesus’ Roger Ver Charged With $50 Million Tax Evasion

Authorities in Spain have arrested cryptocurrency entrepreneur Roger Ver, once known as “Bitcoin Jesus,” after the U.S. Department of Justice charged him with tax evasion.

Unsealed Monday, the indictment alleges that Ver evaded paying taxes to the tune of nearly $50 million, conducted mail fraud, and filed false tax returns.

The DOJ says in its indictment that Ver allegedly lied to the Internal Revenue Service (IRS) about how much Bitcoin he and his companies really owned. 

According to the feds, Ver was expected to file tax returns that reported capital gains from the sale of his “worldwide assets.” These assets included Bitcoin.

But the indictment alleges that despite Ver and his companies owning 131,000 Bitcoins, the crypto entrepreneur provided or caused to be provided false or misleading information—including the Bitcoin he personally owned—to a law firm and appraiser  helping him expatriate his American nationality. 

When he sold the Bitcoin in 2017, he allegedly did not inform the IRS about the gains he had made, despite the fact that the Bitcoins were held by U.S. corporations he was in charge of—named MemoryDealers and Agilestar.

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The Sinister Links Between Jeffrey Epstein, CBDCs, & Bitcoin

The purpose of this article is to create awareness of the urgent threat of Central Bank Digital Currency (CBDC), to discuss and describe Jeffrey Epstein’s potential involvement in both funding CBDCs as well as his possible role in changing the underlying purpose of Bitcoin, rendering it unusable as a cash alternative for day-to-day transactions.

The article also provides a snippet from my book, The Final Countdown, which goes into detail and further provides practical advice for avoiding CBDCs. 

The CBDC Threat

Imagine a future where every dollar you spend is tracked – not by a bank, but by the government. This isn’t a distant sci-fi scenario; it’s a real possibility with the advent of Central Bank Digital Currencies, or CBDCs. These are not just new forms of money; they are potentially powerful tools for monitoring and controlling human behavior.

The concept is simple yet profound – a digital currency issued by the government that can be programmed with specific rules. For instance, your savings could be frozen if your online activities don’t align with governmental standards, or mandatory spending could be enforced to stimulate the economy. This level of control could extend to everyday choices, dictating the groceries you buy or the vacations you can access, all based on a digital scoring system.

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$40 billion worth of crypto crime enabled by stablecoins since 2022

Stablecoins, cryptocurrencies pegged to a stable value like the US dollar, were created with the promise of bringing the frictionless, border-crossing fluidity of bitcoin to a form of digital money with far less volatility. That combination has proved to be wildly popular, rocketing the total value of stablecoin transactions since 2022 past even that of Bitcoin itself.

It turns out, however, that as stablecoins have become popular among legitimate users over the past two years, they were even more popular among a different kind of user: those exploiting them for billions of dollars of international sanctions evasion and scams.

As part of its annual crime report, cryptocurrency-tracing firm Chainalysis today released new numbers on the disproportionate use of stablecoins for both of those massive categories of illicit crypto transactions over the last year. By analyzing blockchains, Chainalysis determined that stablecoins were used in fully 70 percent of crypto scam transactions in 2023, 83 percent of crypto payments to sanctioned countries like Iran and Russia, and 84 percent of crypto payments to specifically sanctioned individuals and companies. Those numbers far outstrip stablecoins’ growing overall use—including for legitimate purposes—which accounted for 59 percent of all cryptocurrency transaction volume in 2023.

In total, Chainalysis measured $40 billion in illicit stablecoin transactions in 2022 and 2023 combined. The largest single category of that stablecoin-enabled crime was sanctions evasion. In fact, across all cryptocurrencies, sanctions evasion accounted for more than half of the $24.2 billion in criminal transactions Chainalysis observed in 2023, with stablecoins representing the vast majority of those transactions.

The attraction of stablecoins for both sanctioned people and countries, argues Andrew Fierman, Chainalysis’ head of sanctions strategy, is that it allows targets of sanctions to circumvent any attempt to deny them a stable currency like the US dollar. “Whether it’s an individual located in Iran or a bad guy trying to launder money—either way, there’s a benefit to the stability of the US dollar that people are looking to obtain,” Fierman says. “If you’re in a jurisdiction where you don’t have access to the US dollar due to sanctions, stablecoins become an interesting play.”

As examples, Fierman points to Nobitex, the largest cryptocurrency exchange operating in the sanctioned country of Iran, as well as Garantex, a notorious exchange based in Russia that has been specifically sanctioned for its widespread criminal use. Stablecoin usage on Nobitex outstrips bitcoin by a 9:1 ratio, and on Garantex by a 5:1 ratio, Chainalysis found. That’s a stark difference from the roughly 1:1 ratio between stablecoins and bitcoins on a few nonsanctioned mainstream exchanges that Chainalysis checked for comparison.

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Eye-Ball Scanning Digital ID Company Worldcoin Integrates With Reddit, Telegram, and More

Worldcoin, the eye-ball scanning protocol co-founded by Sam Altman, is cracking open a wider integration network by adding support for platforms such as Minecraft, Reddit, Telegram, Shopify, and Mercado Libre to its World ID offering. This comes on the back of the cohesive upgrades it has already sealed with Discord, Talent Protocol, and Okta’s Auth0.

Digital ID systems, like the one used by WorldCoin, raise significant privacy concerns due to the sensitive nature of the biometric data they collect and store. The other issue is that identity becomes immutable.

Consider a scenario where your digital identity becomes inaccessible, perhaps due to regulatory action or technical issues. In conventional financial systems, including traditional cash and most cryptocurrencies, you can simply create a new wallet and start over. However, with systems tied to unique biometric identifiers, such as iris scans, you can’t easily replace your identity. Unlike a plot from a science fiction movie, obtaining a new iris scan is not a feasible option.

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Police Raid Man’s Home For Heating It With S9, Charged With Intentional Climate Change

The Bitcoin mining industry is being thrown into chaos as a Canadian man has been arrested for heating his home with an Antminer S9. The man posted a video of his setup on Twitter which lead to law enforcement visiting his home and arresting him. He faces up to 3 months in jail and $600 in fines for “Causing distress to the community” and “intentionally warming the climate.”

The officers raiding the home arrived heavily armed, and even shot the man’s dog who was barking in the hallway after they kicked the door down. Body cam footage shows police laughing after shooting the dog, and one officer exclaimed, “Wow I finally got my first one.” Unfortunately, in Canada, shooting peoples pets is a protected action under qualified immunity.

Canada has been a hotbed for Bitcoin mining, but now many miners are fearful they too will be charged with similar charges. The Canadian government has been unclear about what their intentions are and whether this applies to all Bitcoin miners or just people who post their miners on Twitter. There are also rumors that the Canadian government is going to be rolling out an emissions system to test miners for carbon production, and will be requiring registration.

Many have pointed out how similar Bitcoin miners are to other applications such as space heaters, large data center servers, and just about any application that consumes electricity. Bitcoin miners produce just as much carbon as electric vehicles, yet they are being treated very differently, suggesting the move is targeted. Despite that, the issue of climate change is of upmost concern. If sea levels rise, it will destroy all the billionaires beach front property and secret Caribbean islands.

Elizabeth Warren applauded the move and stated, “1 s9 running emits 4 units of climate change an hour. 1 Bitcoin transaction emits 16 units of climate change. We must be like Canada and stop the madness.” Senate Republicans are currently organizing to censor Warren’s comments on the subject until she passes a basic literacy test.

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The Crypto Whistleblower at the Center of the Sam Bankman-Fried Storm

TIFFANY FONG STOOD among a gaggle of reporters in the gray tiled plaza of Daniel Patrick Moynihan Courthouse in downtown Manhattan. It was just past dawn, but members of the media were already queued up for the start of FTX founder Sam Bankman-Fried’s criminal trial. Fong, 29, took periodic hits from her vape while chatting up reporters, doling out her number and self-deprecating one-liners for stories. She looked like a grown-up version of a former college “it” girl, wearing a black sweater vest, Nike Air Force One sneakers and a leather blazer tied around her petite waist. She whipped out her phone and started vlogging, documenting the experience for her legion of over 90,000 followers on X (formerly known as Twitter) and 30,000 subscribers on YouTube. 

Fong, according to her LinkedIn profile, is a “reluctant crypto content creator.” (She cringes at the term “influencer.”) She’d flown to New York City to attend Bankman-Fried’s trial in person at the Southern District courthouse. Bankman-Fried, who faces over a century in prison, has been charged with seven counts related to fraud. (He has pleaded not guilty.) But unlike other spectators, Fong has visited Bankman-Fried more than 10 times at his childhood home in Palo Alto during his months of house arrest. The pair spent dozens of hours alone in his parents’ study. He introduced her to his childhood stuffed bunny, Manfred. 

During that period, she temporarily moved to San Francisco to be within commuting distance of Bankman-Fried. Fong’s access is perhaps only rivaled by the author Michael Lewis, who spent hundreds of hours with Bankman-Fried for the book “Going Infinite,” an account of the crypto wunderkind’s rise and fall. (Since Bankman-Fried has been jailed and unreachable during his trial, this story of their months-long back-and-forth is told through Fong’s experience. A spokesperson for Bankman-Fried declined to comment.) 

“This is the weirdest little detour my life has taken, getting a front row seat to a massive financial fraud scandal,” Fong tells me in her Airbnb studio rental in downtown Manhattan, where I interview her on the eve of the trial. She sits cross-legged on the bed, showing me the new plastic vapes she hoped wouldn’t set off the metal detectors at the courthouse entrance. I first met Fong at a crypto conference in March, during a nightclub afterparty where the ratio of men to women approached that of a men’s locker room. I’d listened to Fong’s November interviews with Bankman-Fried from before his arrest, when he was telling anyone who’d listen that the collapse was due to a colossal failure of risk management, not fraud. “I’m so out of place in this story,” admits Fong. “It’s just like this random fucking chick wandered into this very serious situation.” 

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Sam Bankman-Fried’s dad allegedly had advisory role at top Democratic ‘dark money network’

Joseph Bankman, the father of troubled former crypto entrepreneur Sam Bankman-Fried, allegedly held an advisory role at a top Democratic dark money network, an arrangement a watchdog says “deserves serious scrutiny.”

The allegation appeared in a lawsuit Bankman-Fried’s former company, FTX, filed against his parents Monday after they allegedly “exploited their access and influence within the FTX enterprise to enrich themselves, directly and indirectly, by millions of dollars,” the company’s lawyers wrote. FTX is seeking to recoup money to pay owed debts.

Bankman-Fried’s father, a Stanford University law professor, “sat on the advisory board of Arabella Advisors,” according to the complaint. 

Arabella Advisors, a Washington, D.C.-based consulting firm, manages a nonprofit network that provides fiscal sponsorship to dozens of left-wing groups.

The funds it manages, which include the New Venture Fund, Sixteen Thirty Fund, Windward Fund and Hopewell Fund, collectively raise over a billion dollars in anonymous cash annually and, in turn, also shower liberal causes and initiatives with money nationwide.

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Digital Asset Sales To Come Under Increased IRS-Treasury Scrutiny

The U.S. Treasury and the IRS have proposed new reporting requirements for digital asset brokers like cryptocurrencies and NFTs in an attempt to “crack down on tax cheats” and help citizens assess tax dues arising from such asset transactions.

Regulations “would require brokers of digital assets to report certain sales and exchanges,” the U.S. Treasury said in an Aug. 25 press release. The proposed regulations “is part of a broader effort at Treasury to close the tax gap, address the tax evasion risks posed by digital assets, and help ensure that everyone plays by the same set of rules.”

Brokers would be required to report on the sale and exchange of digital assets in 2026 for activities that took place during the prior year.

In an Aug. 25 press release detailing the new proposed regulations, IRS Commissioner Danny Werfel said that a critical part of the rules is that it “fits in with the larger IRS compliance focus on wealthy taxpayers.”

“We need to make sure digital assets are not used to hide taxable income, and the proposed regulations are designed to provide a clearer line of sight into activities by high-income people as well as others using them,” he said.

“We want to make sure everyone pays what they owe under the tax laws, and our research and experience demonstrate that third-party reporting improves compliance.”

A Barclays analysis released last year estimated that the IRS could be missing out on more than $50 billion annually due to crypto traders not paying their taxes.

The new rules will also help taxpayers in filing their returns, the Treasury stated.

Under current laws, citizens owe tax on gains made on the sale or exchange of digital assets and can deduct losses on such activity. However, “for many taxpayers it is difficult and costly to calculate their gains.”

The proposal would require that digital asset brokers “provide a new Form 1099-DA to help taxpayers determine if they owe taxes, and would help taxpayers avoid having to make complicated calculations or pay digital asset tax preparation services in order to file their tax returns.”

“These regulations align tax reporting on digital assets with tax reporting on other assets, and, as a result, avoid preferential treatment between different types of assets,” the treasury stated.

The agency cited figures from the Joint Committee on Taxation (JCT) which estimated that the new rules could raise almost $28 billion in revenues for the government over a decade.

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