A former Microsoft engineer has been sentenced to nine years in prison for stealing more than $10 million in crypto from his past employer in the form of “currency stored value” (CSV), including gift cards. The Internal Revenue Service described this as the first bitcoin case that involved tax fraud. Volodymyr Kvashuk used his fellow employees’ accounts and identities to steal and then sell the CSV, and he made it look as though his co-workers were responsible for the fraud. Kvashuk was charged last year.
Kvashuk used a bitcoin mixer to obfuscate the paper trail.
The 26-year-old Ukrainian citizen residing in Washington used a Bitcoin mixing service to obfuscate the paper trail, telling the Internal Revenue Service (IRS) that the $2.8 million worth of crypto that passed through his accounts gifts had been sent from a relative. According to the U.S. Department of Justice (DoJ), “over the seven months of Kvashuk’s illegal activity, approximately $2.8 million in Bitcoin were transferred to his bank and investment accounts. Kvashuk then filed fake tax return forms, claiming the Bitcoin had been a gift from a relative.”
“The sentencing is the nation’s first crypto case that has a tax component to it.”
According to Internal Revenue Service special agent Ryan Korner, the sentencing is “the nation’s first Bitcoin case that has a tax component to it.” He further asserted the sentencing highlights the increasing sophistication of the agency’s criminal division in identifying unreported crypto-asset transactions. Brian Moran of the U.S. Attorney’s Office said that stealing from your employer is bad enough, but stealing and making it appear that your colleagues are to blame sure widens the damage beyond dollars and cents. Ukrainian national Kvushuk was found guilty of 18 federal felonies, including six counts of money laundering and two counts of filing false tax returns.
