Despite President Donald Trump’s professed interest in abolishing taxes on cryptocurrencies based in the U.S., no such legislation has been introduced in Congress, Kemmerer relayed via email. Moreover, a common misconception among investors is that they are not required to declare crypto on their taxes. IRS warning letters are causing widespread anxiety, suggesting the onset of a more extensive enforcement wave. This is likely to intensify with the advent of new 1099-DA regulations, which are due to take effect next year, Kemmerer warned.

“The current climate is one of uncertainty and fear among average crypto investors, many of whom have made earnest attempts to report their taxes accurately,” Kemmerer noted. “With 1099-DA looming, enforcement is set to intensify. The IRS now has greater insight into crypto than ever before, but without precise cost basis data, even compliant investors may be wrongfully flagged. Hence, it’s crucial to maintain detailed records and be proactive in tracking taxable income.”

Starting January 1, 2026, crypto brokers are required to report both the gross proceeds and cost basis of digital asset sales on Form 1099-DA. This means the IRS will automatically receive detailed gain/loss data for users, thereby reducing underreporting and significantly enhancing compliance oversight for crypto holders. However, this April, Trump repealed a controversial IRS crypto rule finalized under Joe Biden that would have also included DeFi platforms as brokers.

The IRS has been dispatching various types of crypto-related warning letters, each with varying degrees of severity. The most prevalent is Letter 6174, which serves as a low-severity educational reminder that crypto transactions may be taxable and should be reported. This does not imply any wrongdoing and is often sent to crypto investors identified by IRS through John Doe summonses issued to exchanges such as Coinbase.

Letter 6174-A indicates suspected underreporting by the IRS, but does not necessitate a response. However, it is advisable for taxpayers to review their return carefully and file an amendment if needed. More serious notices like Letter 6173 and CP2000 are increasingly common, demanding timely responses and potentially triggering audits if ignored.

“Many users are taken aback by the IRS warning letters. These aren’t tax evaders, but ordinary investors who had Bitcoin or Ethereum for years and thought they were compliant,” remarked Ben Yoder, CoinLedger’s Customer Success Manager. “A recurring theme is their concern about honest mistakes made years ago. For instance, one customer was worried about a potential audit because they didn’t report a few hundred dollars of crypto income in 2021.”

Even if taxpayers reported their taxes accurately, they could still receive these letters, often due to challenges in tracking cost basis across wallet-to-wallet transfers. If an individual receives an IRS letter but believes their crypto taxes were filed correctly, they can respond with supporting documents like trade history or Form 1099s from exchanges.

If they failed to report crypto in a prior year, they can amend their return using Form 1040X and include a memo if significant changes are made. While less severe notices like 6174 or 6174-A can be resolved by the recipient manually or by using crypto tax software, more serious letters like CP2000 or 6173 might warrant assistance from a tax professional.

In February, CoinLedger revealed that the average crypto investor’s portfolio saw gains of $5,482 in 2024, with HYPE and BTC contributing the largest unrealized gains, while ETH, ADA, and POL led the losses.

Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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Jay Clayton, the acting US Attorney for Manhattan, informed federal court judge Katherine Polk Failla in a letter dated May 15 that while the charges against Storm remain, one element of the conspiracy to operate an unlicensed money transmitting business charge will be dropped.

“Upon reassessing the circumstances of this case, both this Office and the Office of the Deputy Attorney General have arrived at the conclusion that the prosecution aligns with the letter and spirit of the April 7, 2025 Memorandum from the Deputy Attorney General,” Clayton stated.

In an April memorandum, Deputy Attorney General Todd Blanche declared the DOJ’s decision to cease the implementation of “regulation by prosecution” for crypto. He also stated that the department would not prosecute crypto mixers such as Tornado Cash “for the acts of their end users or unwitting violations of regulations.”

As per Clayton’s announcement, the indictment against Storm will no longer include the allegation of failing to meet money transmitting business registration requirements. This charge had initially been pursued in connection with claims that Storm had illicitly operated Tornado Cash as an unlicensed money transmitter.

However, the government will proceed with the charge under the assertion that Storm transferred funds while being aware they were either proceeds from a criminal act or intended to aid illegal activities. The Justice Department has accused Tornado Cash of facilitating the laundering of over $1 billion in crypto, including for the state-backed North Korean hacking group, the Lazarus Group.

Clayton made it clear that the Justice Department still intends to bring forward the other two charges in its indictment: one count of money laundering conspiracy and one count of conspiracy to violate US sanctions. Each of these charges carries a maximum sentence of 20 years in prison. Meanwhile, the unlicensed money transmitter conspiracy charge could result in a maximum sentence of five years.

Storm, who has pleaded not guilty, is set to face trial on July 14. He was charged alongside co-founder Roman Semenov, who remains at large and is believed to be residing in his home country of Russia.

Other crypto executives facing similar charges have referred to Blanche’s memo in their attempts to have their cases dismissed. They include the co-founders of crypto mixer Samourai Wallet, Keonne Rodriguez and William Hill, and Braden John Karony, CEO of crypto firm SafeMoon.

The post Case Against Tornado Cash Founder, Roman Storm, Continues with Minor Changes appeared first on Crypto Market Insights: Dive In with CryptoUpdate.io.

On February 10, the CFTC reported that Rashawn Russell, residing in New York, had been charged with engaging in a fraudulent digital assets trading scheme from 2020 to 2022. He allegedly lured investors to contribute cryptocurrency to a fraudulent fund. As per the complaint, Russell is accused of diverting approximately $1.5 million via the scheme, leading to his guilty plea to wire fraud in the US District Court for the Eastern District of New York.

“Russell assured investors of no losses, and in some cases, offered a minimum return of twenty-five percent,” the CFTC complaint dated January 16 revealed. “However, Russell knowingly and/or recklessly provided false or misleading information to attract and retain investors.”

This enforcement case aligns with the agency’s new direction since acting Chair Pham announced on February 4 that the CFTC would be reorganizing its Division of Enforcement’s priorities to target fraud. The commission intends to separate enforcement case responsibilities into two task forces: one on retail fraud and another on “complex fraud and manipulation.”

The CFTC, under the interim chairmanship of Pham, who was elected on January 20 in the wake of US President Donald Trump’s inauguration, is expected to witness a change of guard soon. Former Chair Rostin Behnam left the commission one member short when he stepped down on January 20, remaining at the CFTC until February 7.

Under Behnam’s tenure in the 2024 fiscal year, the CFTC logged over $17 billion in monetary relief, primarily from actions against FTX, a crypto exchange. Pham’s recent announcement indicates a shift in the CFTC’s focus from regulating by enforcement towards crypto companies dealing with assets considered commodities.

Meanwhile, the US Securities and Exchange Commission (SEC), another substantial financial regulator of digital assets in the country, revealed in January that it would establish a crypto task force to create a regulatory framework. Following Gary Gensler’s departure, President Trump designated SEC Commissioner Mark Uyeda as acting chair until the US Senate can review the nomination of former commissioner Paul Atkins.

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