The US state of Maryland has announced that they will be starting an “Operation Cryptosweep”. The announcement was made by the Attorney General. Unregistered US crypto platforms will come under investigation.
The State of Maryland’s Attorney General Brian E. Frosh announced that the state would begin investigations against Cryptocurrency entities that do not follow regulations. The announcement was made via a press release published on Aug. 14.
What is Operation Cryptosweep?
“Operation Cryptosweep” is a joint initiative of state and provincial securities regulators in the United States and Canada, wherein they launched probes into potentially fraudulent or noncompliant crypto investment programs. The initiative targeting suspicious crypto investment products is reportedly the largest such coordinated investigation by state and provincial officials.Cointelegraph.com
The Maryland Securities Division will be taking part in the operation. The state has begun investigating Bitcoin trading platforms that are duping investors with a promise of 150% returns.
“Cryptocurrency investments are risky. Investors should be extra cautious when dealing with promoters who claim their offering does not have to be registered with securities regulators. Quick returns of 150% are as rare as Bigfoot. Make sure to do independent research on the product before you invest. Be aware of the risks, and contact the Maryland Securities Division with any concerns before parting with your hard-earned money.”Attorney General Brian E. Frosh
Since the beginning of the initiative, the government of the USA has reported 200 cases of investigations. They include ICO’s or Initial Coin Offerings and crypto-based investment plans. Among the many infractions of regulations, the authorities found that companies were not properly registered.
IRS and Crypto Users
The Internal Revenue Services of USA has been in the news recently for sending a letter to crypto users. According to various reporting agencies, the IRS sent the users a letter reminding them about tax compliance related to cryptocurrency profits.
Various exchanges came forward to explain that most users are compliant with regard to the Tax of the IRS.
The Internal Revenue Service has begun sending letters to taxpayers with virtual currency transactions that potentially failed to report income and pay the resulting tax from virtual currency transactions or did not report their transactions properly.
From the Press Release
“Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties,” said IRS Commissioner Chuck Rettig. “The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations.”
By the end of August, more than 10,000 taxpayers will receive these letters. The names of these taxpayers were obtained through various ongoing IRS compliance efforts.
Last year the IRS announced a Virtual Currency Compliance campaign to address tax noncompliance related to the use of virtual currency through outreach and examinations of taxpayers. The IRS will remain actively engaged in addressing non-compliance related to virtual currency transactions through a variety of efforts, ranging from taxpayer education to audits to criminal investigations.
Virtual currency is an ongoing focus area for IRS Criminal Investigation.
IRS Notice 2014-21 (PDF) states that virtual currency is property for federal tax purposes and provides guidance on how general federal tax principles apply to virtual currency transactions. Compliance efforts follow these general tax principles. The IRS will continue to consider and solicit taxpayer and practitioner feedback in education efforts and future guidance.
Taxpayers who do not properly report the income tax consequences of virtual currency transactions are, when appropriate, liable for tax, penalties and interest. In some cases, taxpayers could be subject to criminal prosecution. US crypto platforms will come under investigation.