IRS criminal investigators see cryptocurrencies and nonfungible tokens as ripe for fraud, including money laundering, market manipulation and tax evasion – and even celebrities could get caught up in the agency’s probes. Digital assets have been a growing concern for government agencies as they’ve become more mainstream, with regulators grappling over how to police the tokens and carry out enforcement activities to deter investors from engaging in criminal activity. “We’re just seeing mountains and mountains of fraud in this area,” said Ryan Korner, special agent in charge of the Los Angeles field office at the IRS’s criminal investigation division. The division is tasked with probing tax crimes and related financial crimes. Celebrities aren’t immune to the IRS’s criminal probes, Korner said late Tuesday at a virtual event hosted by the USC Gould School of Law. “We’re not necessarily out there looking for celebrities, but when they make a blatant or open comment that says ‘Hey, IRS, you should probably come look at me,’ that’s what we do.” IRS investigators seized $3.5 billion worth of cryptocurrencies tied to financial crimes during fiscal year 2021, a figure that accounted for 93% of all the assets seized by the division in that time frame. IRS CI ended the year with 80 cases in its inventory that it was still actively working where the primary violation was tied to crypto, Korner said. Law enforcement agencies are worried about a range of criminal activities. They worry when they see people paying millions of dollars for assets, like […]

There are few things scarier for investors than a bear market — unless you’re involved in crypto, in which case a winter is worse. The chilling term refers to a sharp slump, followed by a drop-off in trading and months of market doldrums — a phenomenon that memorably befell the crypto market in 2018. Bitcoin’s price plunged by more than 80% to as low as $3,100 from the end of 2017 through December of the following year, a period characterized by the boom-and-bust of initial coin offerings and several big banks shelving their plans to start cryptocurrency trading desks. Bitcoin wouldn’t reach a new high until December 2020, according to data compiled by Bloomberg. Memories of 2018 are sparking fears that a repeat is playing out now after the world’s largest cryptocurrency plummeted 50% from its most recent high of almost $69,000 in November. The crypto universe has shed more than $1 trillion in market value on growing conviction that the Federal Reserve is set to start ratcheting back the ultra-accommodative policy settings that fueled a boom in risk assets. The pullback has hit all corners of the crypto ecosystem, from Bitcoin to memecoins and publicly listed crypto exchanges. While the collapse has been rattling enough on its own, it has spawned an even bigger concern that the pain may persist for many months, according to UBS. “There’s this question of how do we characterize that and the nearest analogy is probably 2018, which is this idea of a crypto […]

Wall Street investors may be in need of a neck brace, as nervousness over looming United States interest rate hikes saw share prices whiplashed for a second day running on Tuesday. A selloff sent the Dow Jones Industrial Average down more than 800 points earlier in the session, but by afternoon trading in New York, it had pared the bulk of those losses. The session ended with the blue-chip index losing 66.77 points, or 0.19 percent, to close at 34,275.49. The broader S&P 500 index – a proxy for the health of retirement and college savings accounts – also clawed back from an earlier bruising but closed down 53.70 points, or 1.22 percent, at 4,356.43. The Nasdaq Composite Index lost 315.83 points, or 2.28 percent, to close at 13,539.30 despite upbeat earnings results and forecasts from IBM and Verizon. Stocks fell sharply on Monday before staging a major turnaround, with the Dow and S&P finishing in positive territory. But volatility continues to rule trading as investors prepare for the Fed to hike interest rates. The US Federal Reserve kicked off its first two-day policy-setting meeting of the year on Tuesday.  In December, the Fed signalled it could raise interest rates at least three times this year to rein in soaring inflation that is running near a 40-year high.  And some Wall Street analysts see the Fed hiking rates four times this year. Higher interest rates raise the cost of borrowing – a negative for growth stocks that were the darlings of […]

The International Monetary Fund’s board urged El Salvador to strip Bitcoin of its status as legal currency due to its large risks, highlighting a major obstacle for the nation’s efforts to get a loan from the institution. El Salvador last year sought a $1.3 billion IMF loan, but talks have been stymied by the lender’s Bitcoin concerns, and any program would need to be approved by the board. IMF executive directors, who represent the fund’s 190 member nations, highlighted Bitcoin’s risks to “financial stability, financial integrity, and consumer protection” and fiscal contingent liabilities, the fund said in a statement Tuesday. They urged the authorities “to narrow the scope of the Bitcoin law by removing Bitcoin’s legal tender status.” Some directors also expressed concern over the risks associated with issuing Bitcoin-backed bonds, the fund said. The comments came in the board’s discussion of the Central American nation’s annual Article IV economic evaluation. El Salvador in September made the cryptocurrency legal tender alongside the U.S. dollar, making 40-year-old President Nayib Bukele an icon among crypto enthusiasts. El Salvador is so far the only country to have adopted Bitcoin as legal tender. The nation began buying Bitcoin last year when it was trading around $50,000 and has bought at least 1,801 coins. It has fallen 45% from its peak of almost $68,000 in early November, meaning that the nation has likely lost about $20 million, according to calculations by Bloomberg News.

Bitcoin’s plummet has pushed it through just about every recent technical support level, forcing traders to now consider $30,000 as the next line in the sand. The world’s largest digital asset is mired in its sixth straight day of declines, with the token down roughly 20% over the past seven days. It’s now 50% below its November peak and was trading as low as $32,970 on Monday, the lowest since July. The coin’s selloff has pushed it to the most oversold since March of 2020, based on its Relative Strength Index (RSI) score of 19. Bitcoin is now approaching a support region of $30,000, where some analysts see it finding a near-term floor. Assets are considered overbought if its RSI crosses above 70 and oversold if it falls below 30. “A 50% fall down is not as significant as what we have seen in previously years gone by, but it’s significant now so it’s more of a concern,” said Simon Peters, markets analyst at eToro. “The real support level seems to be around the $30,000 level, where we tested back in May after the Bitcoin mining ban in China.” Wilfred Daye, head of Securitize Capital, the asset-management arm of Securitize, said $30,000 is psychologically important, and Bitcoin should find some support there. But, he adds, should the selloff continue beyond that to $27,000 “miners who got in at beginning of the bull market will be in trouble.” Crypto has come under widespread selling pressure in recent days, with traders pointing […]

Bitcoin, the mother of all cryptocurrencies, has lost almost half of its value in just a few hours. It reached an all-time high of more than $65,000 last year. But on Friday it dropped below $35,000 for the first time in months. And it is not just Bitcoin. Some of the biggest names in the blockchain have been trading in the red. Some blame Russia’s Central Bank, which proposed on Friday a ban on the trade and mining of cryptocurrencies. A ban by China last September had a similar effect. But a US Federal Reserve decision to increase interest rates was already having an effect before the Russian announcement. What does that say about the global economy? Presenter: Hashem Ahelbarra Guests: Naeem Aslam – Chief market analyst at AvaTrade Zennon Kapron – Director of Kapronasia and author of Chomping at the Bitcoin: Past Present and Future, Bitcoin in China Brian Lucey – Professor of international finance and commodities at Trinity Business School