The article is a bit confusing. He was caught sending cash through the mail for Bitcoin, but that’s not illegal, is it?
It says he was a dark web drug dealer but doesn’t describe how he was caught doing that.
From the article:
The IRS posted its advertisement on LocalCryptos in June 2020, with the Mr Coins account offering to buy Bitcoin at above-market prices, via the mail. Sellers were instructed to use encrypted messaging apps Wickr or WhatsApp to contact the spoof trader.
I am guessing since the IRS was involved that he was avoiding taxes through this.
I would assume the former as they used Monero predominantly, which would not discourage anyone because Monero users understand how little accountability there is and when it applies, and because of the amounts.
At this amount, the only conspiracy would be that this will be used by the IRS to convince Congress that it needs a larger budget to do more of this kind of investigation, because cryptocurrencies are going private, finally.
But the IRS are the ones receiving cash here? I guess having the cash to pay for the bitcoins can be seen as evidence of having undeclared income, but they couldn't have known his declared income before the slip-up with the phone number.
Sending cash through the mail is not normal human activity, unless you count the five dollars from grandma for your birthday. It’s pretty stupid to send anything over $20 as you will likely lose the cash to a theif.
Speculation: they probably knew the (bitcoin) address was used on some dirty thing but they needed a way to tie it to someone in meatspace which can be prosecuted.
A sting that brought in $180k seems like such a small amount. How much money did it cost the IRS to run this sting. Knowing government ops, I could see the sting costing more than the ceased funds.
Today's money is not gold, livestock, gems, or slaves as it has been for thousands of years.
Fractional reserve banking (and the modern electronic economic system) virtualizes currency in a way that would be called a dupe bug in any MMORPG. In our case, it is just a feature of the design.
Local and State governments in the US are dependent on tax dollars (property, sales, excise) in addition to federal subsidies, but the federal government doesn't need taxpayers to fund most of its activities.
Accruing balances of paper is fine, the fiat money is imaginary and propped up by usage convention and some other, stronger things.
In terms of Austrian economics, Modern Monetary Theory is really just improving the past 50 years of money printing by directing some of the proceeds to go to individuals. At least it is intellectually consistent, which is more than can be said about the past few decades of Wall Street welfare plus Main Street austerity.
Not soon. The US can maintain its current fiscal suicide approach for a minimum of three decades.
The US is far richer than Japan was when it embarked on a similar fiscal suicide path, there are far more USD assets to chew through via debasing the dollar, and the US has (for now) the global reserve currency which provides even more room for abuse. The US is also still adding wealth to its pile, which furthers the runway, furthers the total amount of treasure the irresponsible monsters in DC have to eat. Although US growth will grind almost to a halt this decade, coming in even worse than the prior decade was. Last decade 3% became the ceiling they couldn't push annual growth over, next it'll be more like 2-2.5% as a ceiling they'll struggle against.
That's before we get to any extension schemes, instigating various outcomes that drive people into the dollar globally to prop up its position for longer, and or otherwise extend US hegemony. Dividing the world into the West + allies vs China (and to a lesser extent, Russia), with lots of scary tension and confrontation (without actually starting WW3), would possibly work. It would enable the US to attempt to redraw lines in its favor once more. China now holds a trivial share of the US treasury market, so they no longer matter when it comes to US debt (eg dumping it); China is turning off their company IPO spigot, so that's not going to matter any longer; and we'll gradually separate economically more and more, with mostly basic manufacturing remaining, and the US sending China agriculture and energy exports. I'd put my money on that, a new cold war to divide the world.
The US can take the national debt up to $60 to $75 trillion, at a minimum. Possibly $100-$120 trillion with a few stretches of sustained growth and some more (real) asset growth.
They can drive the interest rate on that debt down to ~1%-1.5%, or roughly $600b to $1t per year. 20 years from now $1t per year in interest is where we're already at now, adjusted. That's the same process that has been going on for the past several decades, as we've been reducing the interest rate on our national debt. They'll keep pressing down on that. At somewhere around $90-$120t in debt, and call it ~$1t-$1.5t in interest, it'll begin to break the government's ability to function, its ability to fund itself. At $60t in debt 15-20 years from now, it can still operate almost exactly as it is now.
The continued decline of growth, implosion of demographics (population contraction and or stagnation), and tens of trillions of dollars of capital being locked up in very low yielding debt, will remove large amounts of inflationary pressure that would have otherwise been present. Which is again quite similar to the Japan scenario.
All of that adds up to the Fed & Co. being able to continue to play the asset bubble game for decades to come yet. Interest rates will remain hyper low by necessity (they couldn't raise rates meaningfully even if they wanted to), and the beforementioned will largely prevent those low rates from causing classic runaway inflation problems (for exactly the same reason we didn't see runaway inflation last decade). There will be brief periods of spikes of inflation though, because it won't all go smoothly (eg global pandemics happen). One consequence of all of this will be far higher tax rates, targeting the richer classes, and generally enormous pressure to hike taxes on the top 1/3 along with attempts to implement some form of wealth taxes (that pressure is already there, just not high enough yet; but it'll get there).
I have been waiting for the Fed to conjure up a bad bank and put the Fed's underperforming assets and some treasuries into it then have it go insolvent.
Seems like the easiest way to cut the Fed balance sheet.
How old is a '3% of GDP trade deficit'? Also far younger than taxation?
The nature of capital and it's relationship to political states is rapidly evolving due to technology and globalization. I'm not saying MMT is the whole cloth correct response to that evolution, but implying that the supply and demand for capital resembles the state of affairs even 25 years ago is myopic.
Curious how many of the respondents have read MMT literature. Seems to be a theme of believing MMT ignores inflation, which is not at all the case and is addressed directly in Stephanie Kelton's The Deficit Myth.
Credit is created at the point of contract. This was revealed in a 2014 Bank of England report. The current economic arrangements bake in certain percentages of unemployment. MMT suggests reimagining the model to focus on full employment through civic programs that compensate for slow downs in innovation and lending.
Puzzling to see such a staunch offense against alternatives when the present arrangements clearly favor a small few at the expense of the many.
you're right, these other people are just hater idiots. i got your comment, and it makes sense. if the "usg" has unlimited money like the previous person stated then yes, why indeed do they collect taxes.
dont worry youre not crazy, HN is just full of straight-edged authoritarian assholes.
The US government maintains a revenue source to convince bondholders to keep buying its bonds, the majority (edit: large portion) of which are foreign purchasers.
US revenue primarily goes to interest payments on the money/bonds/abstract liquidity it creates.
This business requires demonstrating a continued willingness to raise revenues. The US’ most lucrative business has been revenue by passive tax collection, of which is receives around $1.8tr per year. There is almost zero consensus within the US for governments to be involved in nationalized industry, as the separation is seen as a core value proposition in that culture. So, for revenue of this size it is currently passive taxes that drive the ARR.
No, because ignoring theft leads to theft becoming rampant. But the last time I reported someone stealing $50 using fradulent direct debit, the reaction from the police was pretty much that it wasn't worth investigating. Obviously I got the money back from the bank, but not investigating things that are too small seems like a routine occurrence.
The counterpoint is that it would take 350 million of those investigations to net the same amount as one Madoff.
People tend to worry about small scale corruption because they can see/understand it, but we are in an era when the real financial crime is concentrated at the top, and to your point, we have somewhat decent consumer protections for the small-scale stuff anyway.
Ignore no, but if going after one case costs so much that other cases cannot be persued, then some sort of balancing act needs to be decided.
If they feel that the extra money being spent is essentially marketing money to get their name out there that these cases are persued, then they may feel it is justified expenses. After all, we're talking about it. Then again, mabye the first case costs $200k, but the second case will only cost a fraction since the exeprience is there.??
Man the USA is just so incredibly doomed. Everything has to become a capitalistic profit. There just isn't a greater good anymore. Every part of the government has to turn a profit now. What a frightening place.
Efficient use of resources in a government agency has no connection to capitalism that I can see.
I think its reasonable to ask why the IRS is moving mountains to sting a few hundred grand of bitcoin here and there when there are people scamming the US government for orders of magnitude more money than that every year in ordinary tax fraud, and the IRS claims they do not have enough resources to go after them.
The whole point of the agency is to increase tax revenue. If it costs more to run their operations than they're bringing in by catching tax evaders, then it's not worth it.
You do however need to account for the deterrence effect of their existence. Individual operations might not be cost effective, but the news stories they generate might be enough to encourage people who were flirting with the idea of tax evasion to remain honest.
Honestly isn't about the money it's about sending a message.
Miss a few payments and you'll soon see how much money they're willing to throw at you in threats to drive the message home that your life is over if you don't resume paying, all for very measly amounts like $300. Taking someone to court even for a few minutes is going to cost more than the $300, taking you to prison is going to cost astronomically more than the $300.
Government needs to keep up the meme that taxes are something you owe purely for existing on their land, this meme of course is only aimed towards the working and middle classes, elites are allowed to skirt around it and pay back in other ways.
To the government, the idea that you could know say 5 working/middle class friends who just decided not to pay taxes and had no repercussions is far more dangerous than 1 billionaire not paying taxes. One of these situations is going to make you feel like an idiot for still paying, the other you'll just write off as that 1 person being crooked.
It should be kept in mind that the vast majority of the income tax revenue that sustains the US government comes from the "mass affluent", people who make a lot of money (a few hundred thousand $ per year) but do get it from employment.
This is the center of gravity of the tax system, the people who are in aggregate both well off enough and numerous enough to act as cash cows. Plus being employed limits tax shelters.
So keeping the upper middle class taxpayers compliant should be the top priority of a competent IRS, irrespective of fairness. I don't know how focused on that they really are, but I would give them the benefit of the doubt without definitive evidence.
This is multiply wrong. First, it’s not “worth it” to bring in $100 at a cost of $99. The government is already inefficiently burning wealth when it brings in money at $0 overhead, and now you’re multiplying that by 100. If bringing money into the government were intrinsically good, you could just raise taxes.
Second, this has to be balanced with the taxpayer’s costs of being audited.
What is good and the purpose of tax enforcement is that the system runs as the law defines it and is “fair” in the sense that everybody has to obey the law, without exception.
"10. In or around March of 2021, investigators planned one additional transaction with CHASE HITE, but this time, Postal Inspectors intercepted the packages containing the money and seized them and arranged for the tracking information on the USPS package to reflect that the package had been lost. One of the intercepted packages, containing $28,060 in cash, also contained a box for a heated shoulder wrap. On the box was a distinctive label including a logo that I associate with Wal-Mart. Records received from several Wal-Marts located in the Evansville, Indiana area reflected that such a wrap had been purchased in the days prior to the shipment of the box. The purchase was made with cash, and security footage showed two individuals, a man and a woman, making the purchase. The individuals are both wearing face masks, but the man’s overall appearance is consistent with that of CHASE HITE."
From my own involvement with some civil litigation, I remember my attorney saying that a legal case is like building a wall, and the facts are the bricks. Each brick makes the wall stronger. So, the purchase at Walmart and the Walmart box being used are facts that fit this idea.
Incredible that they were able to track down a boring purchase made at WalMart using security footage and Walmart's inventory management system. Yikes.
The Forbes article does a better job of explaining the case:
> Shortly afterward, a person going by the name “Lucifallen21” got in touch to inquire about the ad, according to the search warrant. The IRS, without saying how, determined that Lucifallen21 was actually Evansville, Indiana, resident Chase Hite. By July, he’d agreed to buy from Mr. Coins, wrapping up $15,040 in cash in clothes, putting the money in a box and posting it to the agent in exchange for approximately 1.59 bitcoin, according to the government’s account.
> ...
> Further messages over Wickr indicated Hite was involved in dark web drug sales, claiming to sell “pills and opioids,” as well as cocaine and marijuana, the IRS claimed. ...
Trading Bitcoin for cash is no crime. It appears the IRS claims it had evidence linking Hite to offers to sell drugs. So the Bitcoin sting was incidental to the case.
I’ve seen state level officials and FinCEN do stings on unregistered money service businesses, not registering does make trading bitcoin for cash to be a crime. But the IRS wouldnt be investigating that specifically - although they can easily recommend tagging that crime on to an indictment
So it does make it tricky to determine what exactly they were investigating and charged the person with
The IRS could look for money laundering which is the antithesis to catching someone for not reporting income. It is illegal to not report and it is illegal to report illicit source and it is illegal to report a licit source that actually had an illicit origin. The latter is money laundering and a money laundering conviction requires the government to prove that the source was illicit, as simple moving large amounts in a convoluted way is not sufficient for a money laundering charge or even an allegation/probable cause - except in the court of public opinion but who cares about that in money matters, I don’t.
Its illegal not to report and reporting that you did something illegal disclosed the illegal activity you did. Making your assets subject to forfeiture and criminal charges levied against you.
To complete my thought, I was also under the impression that the IRS does not disclose criminal activity to any other entities automatically. This still seems to be the case in 2021, unless the tax return becomes evidence in a trial, or under some other conditions.
68 comments
[ 5.4 ms ] story [ 130 ms ] threadI am guessing since the IRS was involved that he was avoiding taxes through this.
edit: Grammar
But the source article has way more details
Still shit reporting, but the source is just forbes blogging masquarading as news
At this amount, the only conspiracy would be that this will be used by the IRS to convince Congress that it needs a larger budget to do more of this kind of investigation, because cryptocurrencies are going private, finally.
The source article shows it was mostly Monero that was transferred
When transporting more than $10000 cash across state lines, it must be reported.
You are required to report cash imports of $10k or more into the country but not across state lines.
Its amazing how the average person believes normal human activity is "illegal"....goes to show the level of mental corruption we suffer under.
Fractional reserve banking (and the modern electronic economic system) virtualizes currency in a way that would be called a dupe bug in any MMORPG. In our case, it is just a feature of the design.
Local and State governments in the US are dependent on tax dollars (property, sales, excise) in addition to federal subsidies, but the federal government doesn't need taxpayers to fund most of its activities.
Accruing balances of paper is fine, the fiat money is imaginary and propped up by usage convention and some other, stronger things.
The US is far richer than Japan was when it embarked on a similar fiscal suicide path, there are far more USD assets to chew through via debasing the dollar, and the US has (for now) the global reserve currency which provides even more room for abuse. The US is also still adding wealth to its pile, which furthers the runway, furthers the total amount of treasure the irresponsible monsters in DC have to eat. Although US growth will grind almost to a halt this decade, coming in even worse than the prior decade was. Last decade 3% became the ceiling they couldn't push annual growth over, next it'll be more like 2-2.5% as a ceiling they'll struggle against.
That's before we get to any extension schemes, instigating various outcomes that drive people into the dollar globally to prop up its position for longer, and or otherwise extend US hegemony. Dividing the world into the West + allies vs China (and to a lesser extent, Russia), with lots of scary tension and confrontation (without actually starting WW3), would possibly work. It would enable the US to attempt to redraw lines in its favor once more. China now holds a trivial share of the US treasury market, so they no longer matter when it comes to US debt (eg dumping it); China is turning off their company IPO spigot, so that's not going to matter any longer; and we'll gradually separate economically more and more, with mostly basic manufacturing remaining, and the US sending China agriculture and energy exports. I'd put my money on that, a new cold war to divide the world.
The US can take the national debt up to $60 to $75 trillion, at a minimum. Possibly $100-$120 trillion with a few stretches of sustained growth and some more (real) asset growth.
They can drive the interest rate on that debt down to ~1%-1.5%, or roughly $600b to $1t per year. 20 years from now $1t per year in interest is where we're already at now, adjusted. That's the same process that has been going on for the past several decades, as we've been reducing the interest rate on our national debt. They'll keep pressing down on that. At somewhere around $90-$120t in debt, and call it ~$1t-$1.5t in interest, it'll begin to break the government's ability to function, its ability to fund itself. At $60t in debt 15-20 years from now, it can still operate almost exactly as it is now.
The continued decline of growth, implosion of demographics (population contraction and or stagnation), and tens of trillions of dollars of capital being locked up in very low yielding debt, will remove large amounts of inflationary pressure that would have otherwise been present. Which is again quite similar to the Japan scenario.
All of that adds up to the Fed & Co. being able to continue to play the asset bubble game for decades to come yet. Interest rates will remain hyper low by necessity (they couldn't raise rates meaningfully even if they wanted to), and the beforementioned will largely prevent those low rates from causing classic runaway inflation problems (for exactly the same reason we didn't see runaway inflation last decade). There will be brief periods of spikes of inflation though, because it won't all go smoothly (eg global pandemics happen). One consequence of all of this will be far higher tax rates, targeting the richer classes, and generally enormous pressure to hike taxes on the top 1/3 along with attempts to implement some form of wealth taxes (that pressure is already there, just not high enough yet; but it'll get there).
Seems like the easiest way to cut the Fed balance sheet.
The nature of capital and it's relationship to political states is rapidly evolving due to technology and globalization. I'm not saying MMT is the whole cloth correct response to that evolution, but implying that the supply and demand for capital resembles the state of affairs even 25 years ago is myopic.
Credit is created at the point of contract. This was revealed in a 2014 Bank of England report. The current economic arrangements bake in certain percentages of unemployment. MMT suggests reimagining the model to focus on full employment through civic programs that compensate for slow downs in innovation and lending.
Puzzling to see such a staunch offense against alternatives when the present arrangements clearly favor a small few at the expense of the many.
dont worry youre not crazy, HN is just full of straight-edged authoritarian assholes.
US revenue primarily goes to interest payments on the money/bonds/abstract liquidity it creates.
This business requires demonstrating a continued willingness to raise revenues. The US’ most lucrative business has been revenue by passive tax collection, of which is receives around $1.8tr per year. There is almost zero consensus within the US for governments to be involved in nationalized industry, as the separation is seen as a core value proposition in that culture. So, for revenue of this size it is currently passive taxes that drive the ARR.
Nope, the majority of US debt is held domestically: https://www.thebalance.com/who-owns-the-u-s-national-debt-33...
That's a great question, what's your answer?
https://en.wikipedia.org/wiki/Nominative_determinism
People tend to worry about small scale corruption because they can see/understand it, but we are in an era when the real financial crime is concentrated at the top, and to your point, we have somewhat decent consumer protections for the small-scale stuff anyway.
If they feel that the extra money being spent is essentially marketing money to get their name out there that these cases are persued, then they may feel it is justified expenses. After all, we're talking about it. Then again, mabye the first case costs $200k, but the second case will only cost a fraction since the exeprience is there.??
I think its reasonable to ask why the IRS is moving mountains to sting a few hundred grand of bitcoin here and there when there are people scamming the US government for orders of magnitude more money than that every year in ordinary tax fraud, and the IRS claims they do not have enough resources to go after them.
recommendation: bring some data and citations to your argument.
currently your perspective sounds like the ramblings of a crazy person.
The whole point of the agency is to increase tax revenue. If it costs more to run their operations than they're bringing in by catching tax evaders, then it's not worth it.
You do however need to account for the deterrence effect of their existence. Individual operations might not be cost effective, but the news stories they generate might be enough to encourage people who were flirting with the idea of tax evasion to remain honest.
Miss a few payments and you'll soon see how much money they're willing to throw at you in threats to drive the message home that your life is over if you don't resume paying, all for very measly amounts like $300. Taking someone to court even for a few minutes is going to cost more than the $300, taking you to prison is going to cost astronomically more than the $300.
Government needs to keep up the meme that taxes are something you owe purely for existing on their land, this meme of course is only aimed towards the working and middle classes, elites are allowed to skirt around it and pay back in other ways.
To the government, the idea that you could know say 5 working/middle class friends who just decided not to pay taxes and had no repercussions is far more dangerous than 1 billionaire not paying taxes. One of these situations is going to make you feel like an idiot for still paying, the other you'll just write off as that 1 person being crooked.
This is the center of gravity of the tax system, the people who are in aggregate both well off enough and numerous enough to act as cash cows. Plus being employed limits tax shelters.
So keeping the upper middle class taxpayers compliant should be the top priority of a competent IRS, irrespective of fairness. I don't know how focused on that they really are, but I would give them the benefit of the doubt without definitive evidence.
Second, this has to be balanced with the taxpayer’s costs of being audited.
What is good and the purpose of tax enforcement is that the system runs as the law defines it and is “fair” in the sense that everybody has to obey the law, without exception.
Read paragraph #10:
https://s3.documentcloud.org/documents/21053100/irs-undercov...
"10. In or around March of 2021, investigators planned one additional transaction with CHASE HITE, but this time, Postal Inspectors intercepted the packages containing the money and seized them and arranged for the tracking information on the USPS package to reflect that the package had been lost. One of the intercepted packages, containing $28,060 in cash, also contained a box for a heated shoulder wrap. On the box was a distinctive label including a logo that I associate with Wal-Mart. Records received from several Wal-Marts located in the Evansville, Indiana area reflected that such a wrap had been purchased in the days prior to the shipment of the box. The purchase was made with cash, and security footage showed two individuals, a man and a woman, making the purchase. The individuals are both wearing face masks, but the man’s overall appearance is consistent with that of CHASE HITE."
From my own involvement with some civil litigation, I remember my attorney saying that a legal case is like building a wall, and the facts are the bricks. Each brick makes the wall stronger. So, the purchase at Walmart and the Walmart box being used are facts that fit this idea.
> Shortly afterward, a person going by the name “Lucifallen21” got in touch to inquire about the ad, according to the search warrant. The IRS, without saying how, determined that Lucifallen21 was actually Evansville, Indiana, resident Chase Hite. By July, he’d agreed to buy from Mr. Coins, wrapping up $15,040 in cash in clothes, putting the money in a box and posting it to the agent in exchange for approximately 1.59 bitcoin, according to the government’s account.
> ...
> Further messages over Wickr indicated Hite was involved in dark web drug sales, claiming to sell “pills and opioids,” as well as cocaine and marijuana, the IRS claimed. ...
https://www.forbes.com/sites/thomasbrewster/2021/09/01/irs-u...
Trading Bitcoin for cash is no crime. It appears the IRS claims it had evidence linking Hite to offers to sell drugs. So the Bitcoin sting was incidental to the case.
I’ve seen state level officials and FinCEN do stings on unregistered money service businesses, not registering does make trading bitcoin for cash to be a crime. But the IRS wouldnt be investigating that specifically - although they can easily recommend tagging that crime on to an indictment
So it does make it tricky to determine what exactly they were investigating and charged the person with
The IRS could look for money laundering which is the antithesis to catching someone for not reporting income. It is illegal to not report and it is illegal to report illicit source and it is illegal to report a licit source that actually had an illicit origin. The latter is money laundering and a money laundering conviction requires the government to prove that the source was illicit, as simple moving large amounts in a convoluted way is not sufficient for a money laundering charge or even an allegation/probable cause - except in the court of public opinion but who cares about that in money matters, I don’t.
I was under the impression that it was required to report all income, including criminal income.