Ex-Microsoft Engineer Sentenced for Cryptocurrency Theft ByJimmy AkiPRO INVESTOR Last Updated: 14 August 2021 As cryptocurrencies grow in popularity, law enforcement authorities have also become more aware and are stepping up their policies to combat illicit use. While they’ve been slow to react and embrace these technologies, they’ve made significant progress in targeting their use for possible criminal offenses. Kvashuk’s Elaborate Crime The latest arrest is from the United States Internal Revenue Service (IRS), who apprehended a Ukrainian national for possible crypto-based tax evasion. According to an official press release from the Department of Justice (DOJ), police in Washington have arrested Volodymyr Kvashuk, a 26-year-old engineer who reportedly stole millions of dollars’ worth of “digital value” – including cryptocurrencies and gift cards – from his previous employer. Kvashuk worked at tech giant Microsoft between 2016 and 2018. While it’s unclear where he worked before this, he reportedly gained access to company files and assets using his co-workers’ details and stole the “currency stored value (CSV).” After successfully pinning the theft on his co-workers, he sold the CSV and resigned. The DOJ report also highlighted that he obfuscated his funds using a Bitcoin mixing service. When filling out his tax obligations, he lied to the IRS that he had only $2.8 million worth of cryptocurrencies, all of which came as gifts from a relative. He was eventually arrested earlier and convicted. A DOJ announcement from February shows that he faced 18 counts, including six counts of money laundering, five counts of wire fraud, two counts of filing false tax returns, and two counts of aggravated identity theft. Other minor charges included access device fraud and mail fraud. While he initially faced a two-decade prison stint, Ryan Korner, a special agent at the IRS, confirmed that the court had sentenced Kvashuk to nine years in jail. Korner called this the first Bitcoin case with a tax component to it, adding that the case highlighted the tax authority’s increased sophistication when it comes to identifying suspicious cryptocurrency transactions. “Simply put, today’s sentencing proves you cannot steal money via the Internet and think that Bitcoin is going to hide your criminal behaviors.” Corroborating, Brian Moran of the United States Attorney’s Office, explained that the crime was terrible. He highlighted the extent to which Kvashuk had gone to cover his tracks, including but not limited to setting up his co-workers for his offenses. IRS Tackles Privacy Protocols Next While the IRS appears to be getting better at tracking cryptocurrencies and combating crypto-based tax violations, the agency has now turned its eye towards privacy coins – particularly, Monero. The use of Monero in criminal activity and money laundering efforts have skyrocketed this year, with many capitalizing on its liquidity and privacy. Looking to stop this, the tax authority has opened contracts for companies that will help improve its ability to track Monero-based transactions. In September, the IRS announced a bounty program, hoping to get privacy-busting solutions that would improve its ability to bypass the security protocols of assets like Monero and concepts like the Lightning Network. The agency eventually awarded two contracts to companies that would develop Monero tracking tools. The contracts, worth $625,000 each, went to noted blockchain analytics firms Chainalysis and Integra FEC.