Our weekly crypto newsletter is here! Learn more about IRS’ hunt for “hidden treasure” and crypto whales’ BTC accumulation. And, if you’re a crypto newbie, check out our pieces on how to set up your first exchange account and what type of wallet might be right for you!
The IRS is looking for “Hidden (Crypto) Treasure”
The IRS recently launched “Operation Hidden Treasure,” whose primary goal is to find your unreported crypto treasure. The operation is a collaborative effort between the IRS’ Office of Fraud Enforcement and its Criminal Investigation Division, which will train agents to investigate blockchains for tax evasion.
Keep in mind that all blockchain transactions are not anonymous but pseudonymous. This means they can be easily traced, although they must not always link that trace to an individual’s identity. “Operation Hidden Treasure” is about finding a way to connect public addresses to particular individuals and examine their finances. By working with private contractors and vendors, presumably blockchain analytics companies, the IRS will create “signatures” of fraudulent activity based on blockchain wallets. These signatures will profile people and put identities to public addresses with unreported crypto-related income.
In addition, the IRS plans to tackle a common cryptocurrency tax evasion strategy in the form of recurring financial transactions under $10,000 to evade tax reporting obligations. Moreover, some tax evaders occasionally use shell companies to hide their real cryptocurrency income, as these can help hide the identity of a company’s owner, allowing them to engage in different types of criminal activities without being caught by the authorities. The bottom line is that crypto fraud will become a top priority for the IRS, and they will now have more options to track unreported crypto income.
Make sure to comply with your tax obligations, as crypto traders might see their “hidden treasures” turn into “hunted” ones and face criminal charges.
The Moby Dick of BTC whales
While most crypto investors are affected by the recent price drop of Bitcoin, the top whales seem to be going all-in. Leading the pack is the biggest individual Bitcoin holder in the world, the Moby Dick of BTC whales, if you will.
This whale has the third-largest Bitcoin wallet – after the cold wallets from Binance and Bitfinex. According to BitInfoCharts, they bought 927 BTC on June 7 despite the hefty price drop. The address initially increased its holdings by 300 BTC, sold 500 BTC on June 9, bought 425 BTC on June 13, another 488 BTC on June 14, and an additional 214 BTC on June 15.
We encourage you to check Glassnode’s data on the increasing number of BTC whales. The number of Bitcoin addresses with a balance above 10,000 BTC significantly rose as prices plunged, so our Moby Dick is not the only whale accumulating BTC at these price levels. Additionally, social metrics also indicate the number of people interested in “buying the dip” has spiked since the crypto crash started last week.
Creating your first crypto exchange account
Do you think the current crypto market crash is an excellent time to make your first digital asset investment? If so, the first step to buying your crypto is to set up an account at a cryptocurrency exchange. Of course, not all crypto exchanges are made equal, but some elements of the registration & KYC (Know Your Customer) process are similar across most platforms.
Opening a crypto exchange account much resembles the process for most apps you’ve used: You start by providing some basic information on the website of your chosen platform, including legal name, physical and email address, phone number, and password. A few verification steps follow before you can finally connect your bank account to directly transfer the funds needed for your first crypto purchase!
For more detailed instructions and further info on the types of crypto exchanges, check our How to Open a Crypto Exchange Account blog post.
What type of crypto wallet is right for you?
Crypto (or blockchain) wallets can serve several functions beyond just holding your crypto coins and tokens. For example, wallets can store NFTs you collect and trade or facilitate sending and receiving digital currencies and NFTs between two people or between one person and an exchange platform. The good thing about having a wallet that isn’t connected to an exchange is that you have complete control over the funds you send to it. Therefore, you must never forget your wallet’s password and secret seed phrase.
However, when choosing a crypto wallet, things are a bit more complex. There are a lot of crypto wallets to choose from, so your selection will depend on several factors. Read our How to Get a Crypto Wallet blog post to find out which type of blockchain wallet is right for you.