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The IRS’ motto is to ‘follow the money.’ Now they crack crypto code.

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The IRS’ motto is to ‘follow the money.’ Now they crack crypto code.

When the Justice Division introduced in February that it had seized bitcoin value $3.6 billion, it was extra than simply the biggest restoration of alleged crime proceeds in U.S. historical past. It was the largest sign but that cryptocurrency, as soon as seen as enticing to criminals for its supposed protect of anonymity, is probably not so crime-friendly in any case.

Just some years in the past, the federal authorities barely knew what to do with cryptocurrency. Now, most federal legislation enforcement businesses make use of consultants adept at tracing it. Investigators are utilizing a brand new era of subtle software program that harnesses huge knowledge to hyperlink transactions to folks, making the most of the truth that most cryptocurrency transactions are recorded in public ledgers that may by no means be erased.

“If a financial institution was robbed 5 years in the past and also you’re nonetheless making an attempt to chase down these leads, you haven’t any concept doubtlessly the place that stolen money might be at this level,” stated Chris Janczewski, who spoke in an unique interview when he was the lead crypto investigator with the Inside Income Service. “With cryptocurrencies, like Bitcoin, each transaction is on a public ledger. It’s public and is there without end.”

Chris Janczewski.Courtesy Chris Janczewski

Janczewski made a profession’s value of circumstances on that proposition, together with appearing because the lead agent in that $3.6 billion seizure. He helped shut down a toddler exploitation ring to a North Korean hacking scheme to a terrorist fundraising enchantment — all involving cryptocurrency. He not too long ago left for a job with TRM Labs, whose software program helped hint the cryptocurrency on the coronary heart of these and lots of different circumstances.

“We on the IRS have at all times been centered on being monetary investigators — following the cash,” he stated. “We’d have posters [that said] ‘The most effective monetary investigators on the earth.’ And I’d wish to level out that there’s not an asterisk on the finish of that. It’s not only for U.S. {dollars} or the euro — that’s all sorts of monetary exercise, to incorporate cryptocurrencies, like Bitcoin.”

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There are several types of cryptocurrency; probably the most generally traded, together with bitcoin, is digital cash that’s not backed by any authorities. It exists on a decentralized community of computer systems based mostly on know-how known as blockchain and guarded by unbreakable codes.

Crypto has not caught on as a typical methodology of fee, however many cryptocurrencies have demonstrated endurance as “shops of worth” just like gold and different valuable metals. The worth of bitcoin and different currencies, whereas fluctuating considerably, has risen dramatically over time, drawing the curiosity of traders.

Initially, bitcoin and different crypto was seen as a useful gizmo for criminals making an attempt to keep away from scrutiny of their transactions, as a result of whereas the transactions are recorded, the identities of these making them might be obscured. However an increasing number of, legislation enforcement has been capable of pierce the veil of anonymity.

“What we’ve seen is that quite a lot of the explanations that made issues like bitcoin enticing to criminals are additionally making it more and more unattractive to criminals,” stated lawyer Urszula McCormack, a Hong Kong-based accomplice at King & Wooden Mallesons specializing in cross-border finance and know-how.

“Whenever you take a look at what is definitely concerned in a transaction, you’re taking a look at the usage of what’s known as a public key or a pockets, and that’s a string of letters and numbers,” she added, however “that isn’t purely nameless.”

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Janczewski and different IRS investigators use analytic software program made by TRM, Chainalysis and different firms to scrape the online and the darkish net for bits of knowledge.

Based on Chainalysis’ annual crime report, simply 0.15 % of crypto transactions final yr concerned felony exercise, down from 3.37 % in 2019.

Nonetheless, that represents a big quantity of felony transactions, the corporate famous in a weblog publish.

The quantity of illicit exercise, $14 billion, “represents a big drawback,” the publish stated. “Felony abuse of cryptocurrency creates enormous impediments for continued adoption, heightens the chance of restrictions being imposed by governments, and worst of all victimizes harmless folks around the globe.”

Jared Koopman, the pinnacle of the IRS’s Felony Investigations Division, stated his company had change into adept at tracing cryptocurrency.

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“Most crimes contain cash,” he stated. “They contain some kind of effort to scheme or defraud people or make a revenue on criminal activity. So our job is to observe and hint these monetary flows it doesn’t matter what the underlying crime is and to carry these folks accountable.”

In its newest problem, the IRS has been tasked with serving to the Justice Division examine how some Russian oligarchs evade sanctions, a few of them with cryptocurrency.

Because the lead crypto investigator, Janczewski performed a task in a sequence of extraordinary circumstances, together with one involving an enormous baby pornography ring known as “Welcome to Video.” The shoppers paid in bitcoin and thought they had been nameless. In 2019, almost 340 folks in 23 states and 12 nations had been arrested. And 23 youngsters had been rescued from their abusers, the Justice Division stated.

“Following the cash led to saving youngsters and truly impacting actual lives,” Janczewski stated.

In 2020, Janczewski helped the Justice Division expose an enormous scheme to steal $250 million value of cryptocurrency by the North Korea authorities, seizing an unspecified sum he stated amounted to thousands and thousands of {dollars} from the rogue regime.

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The case concerned working with army hackers from U.S. Cyber Command, who initially puzzled why the IRS was knocking on their door, Koopman stated.

“Usually, after we usually stroll into the room with quite a lot of different businesses, the query is why is the IRS right here? And I believe that’s each a typical query but in addition one which we’re making an attempt to work to cease from occurring, as a result of we really feel like we provide a singular talent set that many different legislation enforcement businesses and intelligence group companions don’t essentially have.”

Additionally in 2020, Janczewski and the IRS took down three on-line terrorist financing campaigns, involving Hamas’ army wing, Al Qaeda and the Islamic State terrorist group, in what the IRS known as the federal government’s largest seizure of cryptocurrency within the terrorism context.

The Justice Division seized thousands and thousands of {dollars} from greater than 300 cryptocurrency accounts. For a time, the IRS arrange a faux fundraising web site that routed terrorism contributions to U.S. authorities coffers.

“That was fairly pleasant to suppose that cash that individuals thought had been going to go to a terrorist entity was as a substitute going to the victims-of-terrorism fund — like the exact opposite of what they really supposed to do,” Janczewski stated.

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Russian National Charged With Laundering $530 Million Through Cryptocurrency Companies

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Russian National Charged With Laundering 0 Million Through Cryptocurrency Companies

Iurii Gugnin, a 38-year-old Russian national residing in New York, has been charged with 22 criminal counts by the US Department of Justice (DOJ) for allegedly laundering over $530 million through his cryptocurrency companies, Evita Investments and Evita Pay. The charges include wire fraud, bank fraud, money laundering, and violations of the International Emergency Economic Powers Act (IEEPA).

Gugnin is accused of creating a financial pipeline using the stablecoin Tether USDt (USDT) to support sanctioned Russian entities and bypass US sanctions and export controls. He allegedly deceived banks, falsified compliance documents, and facilitated access to sensitive US technologies. Gugnin’s actions highlight the misuse of digital assets for illicit finance and the growing challenges of regulating cryptocurrency markets.

Gugnin presented Evita as a legitimate cryptocurrency payment service but allegedly used it to secretly transfer illegal funds for Russian clients. By posing as a compliant financial technology company, Evita moved money through US banks and crypto exchanges while hiding the funds’ real sources. As president, treasurer, and compliance officer, Gugnin had complete control over these companies’ operations, finances, and regulatory reporting, enabling him to manage transactions, misrepresent the companies’ activities, and ignore Anti-Money Laundering (AML) rules. Authorities claim Evita’s systems were used to help sanctioned Russian entities obtain US technology and channel funds through stablecoins like USDT.

Gugnin is accused of moving $530 million through the US financial system while concealing the illicit origins of the funds. He laundered about $530 million through US banks and cryptocurrency exchanges, primarily using USDT, a stablecoin tied to the US dollar and known for its fast, low-volatility cross-border transactions. The operation involved receiving cryptocurrency from foreign clients, many connected to sanctioned Russian banks, including Sberbank, VTB, Sovcombank, and Tinkoff. These digital funds were channeled through cryptocurrency wallets controlled by Evita and then converted into US dollars or other traditional currencies via US bank accounts. This helped Gugnin to obscure their origins and assist Russian clients in evading international sanctions.

Gugnin used deceptive methods to hide the illegal nature of these cross-border transactions. He altered invoices digitally to remove the names and addresses of Russian clients and provided false compliance documents to banks and cryptocurrency exchanges. These documents wrongly claimed that Evita had no ties to sanctioned entities and had complied with AML and Know Your Customer (KYC) regulations. Despite claiming compliance, Evita allegedly operated without an actual AML compliance and failed to file Suspicious Activity Reports (SARs) as required by US regulations. This allowed Gugnin to mask the source and purpose of the funds, enabling high-risk transactions that may have supported Russia’s access to restricted US technology.

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Gugnin, through his cryptocurrency companies, allegedly created a financial network to support Russian entities banned by US sanctions. Prosecutors allege he handled more than $500 million in transactions for Russian clients connected to sanctioned banks, including PJSC Sberbank, PJSC Sovcombank, PJSC VTB Bank, and JSC Tinkoff Bank. While living in the US, Gugnin held personal accounts with sanctioned banks JSC Alfa-Bank and PJSC Sberbank. He also enabled payments to acquire US export-controlled technology, such as sensitive servers, and laundered money to obtain components for Rosatom, Russia’s state nuclear agency. Actions of Gugnin and Evita provided Russian clients access to restricted components. Gugnin hid his activities by altering invoices to conceal Russian ties and falsifying compliance documents.

Gugnin and his companies are accused of deliberately violating US sanctions and export controls and the International Emergency Economic Powers Act (IEEPA). He allegedly deceived US banks and cryptocurrency exchanges by falsely stating that Evita had no connections with sanctioned Russian entities, while actively processing transactions for clients linked to blacklisted banks. To hide his activities, Gugnin secured a Florida money transmitter license by providing false details about Evita’s operations. This allowed him to use crypto exchange services under the pretense of compliance. Gugnin transferred over $500 million, often in USDT, into the US financial system through this scheme. Gugnin’s actions violated federal laws and threatened national security by enabling sanctioned entities to evade restrictions and illegally obtain sensitive US technologies.

The US DOJ alleges that Gugnin and his crypto companies failed to follow key AML rules required by the Bank Secrecy Act. Although Gugnin presented Evita as a legitimate money services business, he allegedly did not establish an effective AML program and failed to submit suspicious activity reports (SARs) to the Financial Crimes Enforcement Network (FinCEN), which are crucial for detecting and preventing illegal financial activities. Moreover, Gugnin misled banks and cryptocurrency exchanges by falsely claiming that Evita complied with strict AML and KYC standards, when these measures were either inadequate or missing. This deception allowed over $500 million to flow through the US financial system without proper regulatory oversight.

Federal investigators found strong evidence that Gugnin knew his actions were illegal. They found that Gugnin had allegedly searched terms like “how to know if there is an investigation against you,” “money laundering penalties US,” and “am I being investigated?” This showed he was aware of potential legal risks. Gugnin had also searched for “Evita Investments Inc. criminal records” and “Iurii Gugnin criminal records,” indicating he was worried about the consequences of his actions. Gugnin had also visited websites explaining signs of being under criminal investigation and ways to detect law enforcement attention. These online activities suggest he was conscious of his guilt and actively tried to avoid detection. This digital evidence supports the prosecution’s claim that Gugnin intentionally broke US laws while attempting to conceal his money laundering activities from authorities.

Gugnin faces a 22-count federal indictment for offenses related to laundering $530 million through his cryptocurrency companies. He has been charged with wire fraud, bank fraud, money laundering, conspiracy to defraud the US, violations of the IEEPA, and running an unlicensed money transmitting business. Additional charges stem from Gugnin’s failure to establish an effective AML program and not filing suspicious activity reports (SARs). If found guilty, Gugnin could face up to 30 years in prison for each bank fraud charge and up to 20 years for wire fraud and sanctions violations. Gugnin was arrested and arraigned in New York, and he is currently detained while awaiting trial, as authorities consider him a flight risk.

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The case against Gugnin reveals increasing concerns about cryptocurrencies, especially stablecoins like Tether, being used to evade cryptocurrency regulations and US sanctions. As part of a broader effort to combat illegal crypto activities, the indictment shows how sanctioned entities, particularly those connected to Russia, use digital currencies to bypass restrictions and access global financial systems. Although stablecoins provide transparent transaction records, their speed and worldwide reach make them appealing for money laundering. The Gugnin case may lead to stricter regulations for crypto exchanges, payment processors, and money transmitters, with more vigorous enforcement of AML and sanctions compliance rules. Gugnin’s case also highlights the national security risks, as his actions enabled Russian clients to obtain restricted US technology. It may result in regulators imposing more stringent reporting measures on crypto firms to prevent foreign adversaries from exploiting digital finance to harm US interests.

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Attorney General Jackson and Secretary of State Marshall Launch Crypto Scams Prevention Effort

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Attorney General Jackson and Secretary of State Marshall Launch Crypto Scams Prevention Effort
FOR IMMEDIATE RELEASE Tuesday, July 15, 2025 Email: bconroy@ncdoj.gov Phone: 984-383-9038 RALEIGH – Attorney General Jeff Jackson and Secretary of State Elaine Marshall joined AARP, the Wilmington Police Department, and United Way NC/NC 211 to launch a statewide effort to help prevent bitcoin and cryptocurrency ATM scams. Victims of these scams can lose well over […]
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Bank of America Embraces On-Chain Data Analysis for Cryptocurrency Insights

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Russian National Charged With Laundering 0 Million Through Cryptocurrency Companies

Bank of America has been discreetly preparing for potential disruptions in the cryptocurrency market by focusing on on-chain data analysis. This strategic move is aimed at better understanding the volatile nature of digital currencies and gaining deeper insights into market trends, investor behavior, and potential risks. The bank has been conducting extensive research and analysis on blockchain data, which allows for a more granular understanding of the market compared to traditional financial metrics.

By analyzing blockchain data, Bank of America can track transactions, monitor wallet activity, and assess the overall health of the cryptocurrency ecosystem. This approach enables the bank to make more informed decisions and mitigate risks associated with the cryptocurrency market. The shift towards on-chain data analysis reflects a broader trend within the financial industry, as institutions increasingly recognize the need to integrate blockchain analysis into their risk management strategies.

This proactive approach by Bank of America underscores its commitment to staying ahead in an ever-evolving financial landscape. The bank’s efforts are part of a larger initiative to enhance its capabilities in the digital asset space. By leveraging on-chain data, Bank of America aims to provide more comprehensive and accurate assessments of the cryptocurrency market, thereby better serving its clients who are increasingly interested in digital currencies and blockchain technology.

The move by Bank of America to focus on on-chain data analysis is a significant development in the financial industry. It highlights the growing importance of blockchain technology and the need for financial institutions to adapt to the changing landscape. As the cryptocurrency market continues to evolve, Bank of America’s proactive approach positions it well to navigate the challenges and opportunities that lie ahead. This strategic shift not only enhances the bank’s risk management capabilities but also demonstrates its readiness to embrace the future of finance.

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