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IRS: four of the biggest scams of 2023 are crypto.

Recently, the IRS (Internal Revenue Service), the US government agency responsible for taxes and duties, has published a report on the top 10 scams of the year, and of these, 4 come from the crypto world.

The IRS’s crypto scams of 2023

The worst of the four is OneCoin, a well-known crypto scam for many years now. It has been ranked as the third most mentioned by the IRS after a biodiesel scam and tax evasion.

Just after OneCoin, in fourth place overall, we have Ian Freeman, who helped launder $10 million in proceeds from various online scams by exchanging dollars for Bitcoin.

At the seventh place there is the Silk Road hacker, James Zhong, who stole 50,000 BTC.

At the eighth place, there is the scam of the cryptocurrency Oyster Pearl, launched by Amir Bruno Elmaani in 2017. 

Therefore, these are neither new scams nor scams related to crimes committed in 2023. The ranking, in fact, takes into account the sentences of conviction issued in 2023, which obviously refer to previous events. 

Furthermore, it must be said that out of the four crypto scams, only two are actual scams, because Freeman’s case is instead a money laundering offense, and Zhong’s case is a theft.

Moreover, even the second one, that of Mark Anthony Gyetvay, is not a real scam against third parties, but a simple case of tax evasion against the State. 

To tell the truth, even the first one, the biodiesel one, is at the expense of the State, so the biggest scam against the citizens for which convictions were issued in the USA in 2023 remains OneCoin. 

The OneCoin mega-scam

The IRS mentions the 20-year prison sentence imposed on Karl Sebastian Greenwood, a Swedish and British citizen, and co-founder of OneCoin along with fugitive Ruja Ignatova. 

Greenwood has been sentenced to serve 20 years in prison and pay approximately 300 million dollars in fines. 

OneCoin is defined as a massive fraud scheme that started operating as early as 2014. Initially based in Sofia, Bulgaria, it sold an alleged cryptocurrency through a global multi-level marketing network. 

In reality, technically it was not a real cryptocurrency because it was not public and did not even have a blockchain. It was marketed as such for mere propaganda reasons, as it exploited the enormous success achieved by Bitcoin the previous year.

In total, over the course of several years of activity, millions of people have invested over 4 billion dollars in this fraudulent cryptocurrency, also because only in recent years has the organization been stopped. 

On the contrary, to tell the truth, it seems that there are still some people around who defend or propose it as a legitimate form of investment, although it has been clear for years that it is only a scam. 

Oyster Pearl

The other real crypto scam mentioned by the IRS is Oyster Pearl.

The founder of this crypto project, Amir Bruno Elmaani better known as Bruno Block, has been sentenced to 48 months in prison and ordered to pay a fine of over 5.5 million dollars for tax offenses. 

The scam was launched in October 2017, when Elmaani started promoting the new cryptocurrency he created called Pearl. Bruno Block claimed to be developing an online data storage platform, known as Oyster Protocol, which would allow users to purchase online data storage with the Pearl (PRL) token.

None of this has ever been done, and in October 2018, just one year later, the Oyster Protocol smart contract was hacked due to a bug.

The market value went from the initial $0.03 to $3.1 in January 2018, which is almost x100 in a few months. Then it dropped back to $0.05 in September and was finally delisted in November. 

Elmaani did not file a tax return for his earnings in 2018, while it appears that he spent over 10 million dollars on the purchase of several yachts, 1.6 million dollars at a carbon fiber composites company, hundreds of thousands of dollars at a home goods store, and over 700,000 dollars on the purchase of two houses. The IRS intervened precisely because of this tax evasion. 

IRS: the other two scams connected to crypto

The IRS specifically deals with taxes, so the cases it mentions always have something to do with taxes or duties owed to the state but not paid. 

For example, the case of Ian Freeman is connected to the fact that he failed to register his activity with the Financial Crimes Enforcement Network, as required by law, and to the fact that he had disabled the anti-money laundering features. 

So in theory he could have also operated in compliance with the law, but he decided not to do so to allow his customers to convert Bitcoin without any issues. 

It has even been discovered that Freeman and his accomplices opened and managed accounts at financial institutions on behalf of various churches, including the Shire Free Church, the Church of the Invisible Hand, the Crypto Church of New Hampshire, and the NH Peace Church. 

They then convinced their clients to lie to financial institutions by describing their deposits as donations to the church. 

He was identified because he did not pay taxes between 2016 and 2019.

The case of James Zhong, on the other hand, is much simpler because it is a theft carried out through hacking. 

After stealing about 50,000 BTC from Silk Road in September 2012, for about 10 years he tried to hide his activities by transferring the Bitcoin to a series of separate addresses under his control. 

Despite this, the authorities managed to trace him and confiscate BTC from him, with a total value of about 3.4 billion dollars. 

Marco Cavicchioli
Marco Cavicchioli
Born in 1975, Marco has been the first to talk about Bitcoin on YouTube in Italy. He founded ilBitcoin.news and the Facebook group" Bitcoin Italia (open and without scam) ".