A Florida man admitted using “sophisticated online techniques” to conceal more than $1 million in cryptocurrency from the IRS. Ethan Thomas Trainor pleaded guilty to attempted tax evasion. According to information revealed in court and a proffer statement, Trainor sold hacked online accounts on darkweb markets in exchange for cryptocurrency. He used mixers in an attempt to obscure the source of the funds. Trainor then underreported his earnings to the IRS by filing tax returns that underrepresented his earnings. For example, according to a criminal information, Trainor filed a tax return in 2015 that was short by $181,933. As a result, the filing resulted in a “loss” to the federal government of $40,846. The underreported amounts Trainor admitted that he filed similar tax returns multiple times, resulting in a total “loss” to the federal government of $238,894. From the proffer statement: “Ethan TRAINOR bought and sold hacked online account login (usemames and passwonis) for movie streaming websites such as Netflix, pornography websites, Spotify, Major Sports websites, laming websites, and Uber accounts through various dark net markets. TRAINOR illegally obtained these usemames and passwords using various methods, from hacking the accounts himself to buying the hacked usernames and passwords. These darknet markets that TRAINOR operated on are specifically designed to facilitate illegal commerce and provide anonymity through user concealment and by employing numerous financial obfuscation techniques. Agents were able to successfully trace the virtual flow of cryptocurrency proceeds from TRAINOR’s sales on various blockchains to numerous mixing and cash-out services.” Very serious IRS-CI agents in training There is virtually no information on how investigators tracked Trainor’s activities. Perhaps they flagged him for tax evasion and worked backward from there. He faces up to five years in prison and is scheduled to be sentenced in December. Non-Payment of Federal Income Tax on Cryptocurrency Earnings Leads to Conviction for South Florida Resident | www.justice.gov, archive.is, archive.org Statement The last thing you see (via darknetlive.com at https://darknetlive.com/post/florida-man-convicted-of-attempted-tax-evasion/)

Cryptocurrency mixer use has reached an all-time high in 2022, according to a report from the blockchain analysis firm Chainalysis. Mixers may soon become obsolete as Chainalysis continues to refine the ability to demix certain mixing transactions and see users’ original source of funds. Chainalysis, a member of the World Economic Forum’s (WEF) Global Innovators community, is a leader in the blockchain analytics industry. The company is an extension of governments, providing services to law enforcement agencies and hiring former feds and FinCEN employees. Mixers are receiving record amounts of cryptocurrency in 2022, according to a Chainalysis report published on July 14, 2022. On April 19, 2022, mixers received “an all-time high of $51.8 million worth of cryptocurrency.” A chart provided by Chainalysis reveals that mixers received roughly $24 million worth of cryptocurrency on the same day in 2021. “Are Mixers Compliant?” In the report, Chainalysis laments that mixers are legal “despite their utility for criminals.” FinCEN, the Financial Crimes Enforcement Network, clarified in 2020 that cryptocurrency mixers are considered money transmitters under the Bank Secrecy Act (BSA) and must comply with the same regulations as other money transmitters. These regulations include maintaining an anti-money laundering compliance program and following “Know Your Customer” (KYC) rules for Money Services Businesses (MSBs). “Given that increased privacy is the whole point of using a mixer, it seems unlikely that one could implement those compliance procedures and retain its user base. “ Types of Transactions So far, in 2022, 23% of funds sent to mixers came from a cryptocurrency address associated with illicit activity. Illicit transactions accounted for just 12% of mixer activity in 2021. Chainalysis tracked several categories of illicit activity. Terrorism financing Stolen Funds Scam Sanctions Ransomware Cybercriminal administrator Fraud shop Darknet market Child sex abuse material “What stands out most is the huge volume of funds moving to mixers from addresses associated with sanctioned entities, especially in Q2 2022.” In April 2022 (Q2), the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Hydra Market. Transactions from addresses linked to Hydra Market accounted for 50.4% of all funds moving to mixers from sanctioned entities in 2022. Lazarus Group is a hacking group purportedly connected to the Democratic People’s Republic of Korea (DPRK). In 2022, Lazarus Group hackers stole roughly $1 billion in cryptocurrency from DeFi projects. Funds sent from addresses associated with the Lazarus Group and Blender.io accounted for nearly all of the remaining transactions in the same category. Blender.io is the first cryptocurrency mixer sanctioned by OFAC. OFAC sanctioned the mixer for allegedly processing $20.5 million in stolen cryptocurrency, some of which came from the Lazarus Group. “Balancing privacy with safety.” Chainalysis, which is a neutral source when it comes to discussions about financial privacy, believes that mixers “present a difficult question” to “members of the cryptocurrency community.” “Virtually everyone would acknowledge that financial privacy is valuable, and that in a vacuum, there’s no reason services like mixers shouldn’t be able to provide it. However, the data shows that mixers currently pose a significant money laundering risk…” Mixer Usage Reaches All-time Highs in 2022 With Nation State Actors and Cybercriminals Contributing Significant Volume | archive.is, archive.org, chainalysis.com (via darknetlive.com at https://darknetlive.com/post/chainalysis-report-about-mixer-use-increasing/)

The crooks needed at least two private keys, each stored in two parts... but they got them anyway.

Unless you’ve been under a rock, you’ll know that earlier this week Facebook announced plans for a new global cryptocurrency for absolutely everyone called Libra.