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Global Regulators Continue to Raise Enforcement Actions Related to Cryptocurrencies

As the worldwide crypto crackdown of 2022 gains traction, global authorities continue to make up for years of passivity in relation to blockchain technology, with new regulations and enforcement actions arriving every week.

The ruling allows the IRS to obtain information on taxpayers in the United States who used SFOX to execute at least $20,000 in crypto transactions between 2016 and 2021.

On Monday, a federal district court in California issued an order allowing the Internal Revenue Service (IRS) to serve a John Doe summons on the crypto primary dealer SFOX.

According to the order, the main goal of this latest action is to “obtain information about possible violations of internal revenue laws by individuals whose identities are unknown,” which basically means that the move is intended to ensure that US citizens pay the appropriate amount of taxes for their cryptocurrency dealings.

The order makes no allegations of misconduct by SFOX in its digital currency operation and is only concerned with getting information about active users of the site whose names are unknown.

“The information sought by the summons approved today will help to verify that cryptocurrency owners are complying with tax laws,” stated David A. Hubbert, Deputy Assistant Attorney General of the Justice Department’s Tax Division.

2017 ICOs are not out of the hot seat

The Securities and Exchange Commission charged Dragonchain (DRGN) for welling $16.5 million in unregistered securities during its initial coin offering (ICO) in 2017. This is evidence that US regulators are still dealing with a backlog of enforcement actions.

The SEC is suing Dragonchain creator and CEO Joe Roets, as well as three businesses connected to Roets: Dragonchain Inc., Dragonchain Foundation, and The Dragon Company. The SEC is suing Roets and his linked corporations for permanent injunctions, disgorgement with prejudgment interest, civil fines, and conduct-based injunctions.

In response to the charges, Roets wrote an open letter on May 25 in which he stated that he is confident he has a “very strong case” and suggested that the SEC was “picking and choosing projects to target, often singling out the ones with the greatest opportunity to disrupt incumbent interests, while giving a free pass to others.” On the global front, Dutch authorities have underlined that developers can be held liable for the code they produce if its “primary goal” is to commit crimes or help criminals.

According to the Fiscal Information and Investigation Service (FIOD) of the Netherlands, “if a tool has been produced for the sole aim of performing criminal crimes, such as concealing criminal flows of money, then putting online/making available a constructed tool may be punishable.” This followed the arrest last week of an unidentified Tornado Cash developer, whom many assume is Alexey Pertsev, in the aftermath of the cryptocurrency mixer’s censure by US regulators.

The FOID’s comments, according to the Defi Education Fund, “may have far-reaching ramifications for all software makers, who could be held liable for potential criminal applications of their product.”

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  • Global Regulators Continue to Raise Enforcement Actions Related to Cryptocurrencies
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