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Square Pegs and Round Holes: Tornado Cash, Anti-Money Laundering, and Crypto

Wednesday, August 17th, 2022

On August 8th, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) went after virtual currency “mixer” Tornado Cash. Tornado Cash was sanctioned, and as the Treasury’s press release notes,

As a result of today’s action, all property and interests in property of the entity above, Tornado Cash, that is in the United States or in the possession or control of U.S. persons is blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked. All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.

Before I get into the meat of this post, let me explain what a mixer is. The idea of a mixing service is to literally mix “good” cryptocurrency with “bad” cryptocurrency so that no one knows if you have bad cryptocurrency. Tornado Cash allegedly took in Ethereum (ETH) from people who just wanted to anonymize their transactions (which is not illegal) and from others who were criminals or state actors such as North Korea, mixed it all together, and it became very difficult (if not impossible) to tell good crypto from bad crypto.

What is the legal basis of Treasury’s sanctions? Anti-money laundering laws. Let’s go back to the days of the mafia. Assume you have $500 million of tainted cash you’d love to invest (and have turned into “good” cash). In John Grisham’s The Firm the mafia used a tax law firm to money launder the funds in the Caribbean (with about 25% of each ‘shipment’ lost to bribes and corruption). Today, moving such cash around to be legal is tougher than ever as most countries exchange information with each other. The laws that prohibit this date from this time (and are part of the Bank Secrecy Act and the later Patriot Act).

That takes us to cryptocurrency. The Financial Crimes Enforcement Network (FINCEN) ruled that cryptocurrency is a type of currency and is subject to the anti-money laundering laws. This means firms anywhere in the world who deal with Americans must have anti-money laundering law practices for cryptocurrency. Similar laws exist in most of the world.

But isn’t cryptocurrency anonymous? No, it’s pseudonymous. The blockchain is permanent, so if you can figure out someone’s address you can trace people.

Not only was Tornado Cash sanctioned, a developer of the software was arrested in the Netherlands. Now, I am not an attorney (and I am not in the Netherlands), but I was told by an individual who is familiar with the Netherlands’ anti-money laundering laws that they are similar to those of the US, only tougher. But how can writing software (or ‘code’) be illegal?

I suspect the issue isn’t the writing of the software; rather, it’s allowing the software to be used and being active in the website allowing the mixing. Let’s say I write software to allow Bitcoin to be mixed. I post the software on an open-source forum. That’s probably not illegal. But what if I now actively market this product, don’t do anything to comply with anti-money laundering laws even though I don’t take any profits from the mixing: Have I committed a crime? Almost certainly I have (probably multiple felonies).

That’s the problem cryptocurrency advocates face: the real world is intruding, and anti-money laundering laws are part of the real world. Here, cryptocurrency is a square peg and the round holes are the anti-money laundering laws. While I do see headlines stating, “Coin Center prepares legal challenge to Treasury’s Tornado Cash sanctions,” I highly doubt any such challenges will be successful. FINCEN’s pronouncement that cryptocurrency is a currency for anti-money laundering law purposes seems reasonable (and almost certain to pass Chevron muster), and there’s nothing unconstitutional with the anti-money laundering laws.

But, Russ, won’t that will lead to cryptocurrency being centralized? Won’t this just defeat the purpose of cryptocurrency and it will just become (more or less) another form of currency–just digital and online? Yes, that’s the likely result. This may not please the Libertarian cryptocurrency advocates but I don’t see anti-money laundering laws being overturned during my lifetime. It appears the freewheeling age of cryptocurrency is ending sooner rather than later.

Tags:AML
Posted in Cryptocurrencies, FINCEN | Comments Closed

Bozo Tax Tip #3: Ignore Cryptocurrency!

Wednesday, April 13th, 2022

Right underneath your name and address (and your spouse’s name) on Form 1040 is this question:

“At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?”

All taxpayers must answer this question. The IRS is basically telling everyone, thou shalt report your cryptocurrency gains and losses.

It’s clear the IRS means business. Over the last few years the IRS has successfully enforced summonses against several US-based cryptocurrency exchanges. To date, most IRS enforcement efforts in cryptocurrency have been going toward the low-hanging fruit: individuals who have not reported their cryptocurrency. I do expect the IRS to start looking at auditing large users of crypto. Given Commissioner Rettig’s remarks on the Tax Gap, IRS management clearly believes that there’s a lot of tax dollars to be found in cryptocurrency.

There is one truism, though: If you don’t report your cryptocurrency gains (and losses), you’re violating the law. So if you need to take some time to figure it out before filing your 2021 returns, make an estimate of your gains (or losses) and file an extension. Or you can choose the Bozo behavior of ignoring your cryptocurrency.

Tags:BozoTaxTips
Posted in Cryptocurrencies | Comments Closed

Online Gambling and Cryptocurrency Addresses for 2022

Tuesday, February 22nd, 2022

[This listing has been replaced by the 2023 listing.]

If you have one or more foreign financial accounts and you have $10,000 aggregate in those account(s) at any time during 2019, you must file the Report of Foreign Bank and Financial Accounts (the “FBAR”). This is Form 114 from FINCEN. (The IRS and FINCEN now allege that foreign online poker accounts are “casino” accounts that must be reported as foreign financial accounts. The rule of thumb, when in doubt report, applies—especially given the extreme penalties.) You also should consider filing an FBAR if you have $10,000 or more in a non-US Cryptocurrency Exchange.

There’s a problem, though. Most of these entities don’t broadcast their addresses. Some individuals sent email inquiries to one of these gambling sites and received politely worded responses (or not so politely worded) that said that it’s none of your business.

Well, not fully completing the Form 114 can subject you to a substantial penalty. I’ve been compiling a list of the addresses of the online gambling sites. It’s presented below.

FINCEN does not want dba’s; however, they’re required for Form 8938. One would think that two different agencies of the Department of the Treasury would speak the same language…but one would be wrong.

You will see the entries do include the dba’s. Let’s say you’re reporting an account on PokerStars. On the FBAR, you would enter the address as follows:

Rational Intellectual Properties Limited
Douglas Bay Complex, King Edward Rd
Onchan, IM31DZ Isle of Man

Here’s how you would enter it for Form 8938:

Rational Intellectual Properties Limited dba PokerStars
Douglas Bay Complex, King Edward Rd
Onchan, IM3 1DZ Isle of Man

You will also see that on the FBAR spaces in a postal code are removed; they’re entered on Form 8938. You can’t make this stuff up….

Finally, I no longer have an address for Bodog. If anyone has a current mailing address, please leave it in the comments or email me with it.

Foreign cryptocurrency exchanges with just cryptocurrency do not have to be reported on the FBAR. However, if the account holds anything else (such as ‘fiat’ currency like US dollars, Euros, etc.) the account is reportable.

There is no dispute, though, about reporting foreign cryptocurrency exchanges on Form 8938: They must be reported on Form 8938 (if you have a Form 8938 filing requirement).

Note: This list is presented for informational purposes only. It is believed accurate as of February 22, 2022. However, I do not take responsibility for your use of this list or for the accuracy of any of the addresses presented on the list.

The list is in the cut text below.

The list is in alphabetical order by the common name (not the legal name) of the gambling site. An entry is:

Common Name
Legal Name
Address
City, State/Territory, Postal Code, Country

Note that not all entities have states/territories or postal codes.

IMPORTANT: When reporting on Form 114, the dba’s are not included. When reporting on Form 8938, the dba’s are included.

10Bet
Ocean Star Limited dba 10bet.com
Dragonara Business Center, 5th Flr, Dragonara Rd
St. Julians, STJ3141, Malta

12Bet (except U.K.)
Pacific Sea Marketing International Ltd. dba 12bet.com
MillMall, Ste 6, Wickhams Cay 1, PO Box 3085
Road Town, Tortola, British Virgin Islands

12Bet (U.K.)
TGP Europe Limited dba 12bet.uk
22A Castle St
Douglas, IM1 2EZ, Isle of Man

188Bet
Cube Limited dba 188bet
Ground Floor, St. George’s Court, Upper Church St
Douglas, IM1 1EE, Isle of Man

5dimes
5Dimes Casino and Sportsbook
Edificio Equus
San Jose, Costa Rica

888poker (except U.K.)
Virtual Digital Services Limited dba 888 Poker
Level G, Quantum House; 75, Abate Rigord St
Ta’Xbiex, XBX1120, Malta

888poker (U.K.)
888 UK Limited dba 888 Poker
Ste 601-701, Europort
Gibraltar, Gibraltar

AA Poker
Memoriki Limited dba AA Poker
18/F, Star Centre, 35 Hung To Rd, Kwun Tong, Kowloon
Hong Kong, Hong Kong

America’s Cardroom
BMX Entertainment dba America’s Cardroom
71C Georgio A, Office 3, Germasogeia
Limassol, 4047, Cyprus

Asianconnect88
Asianconnect N.V. dba Asianconnect88
E-Zone Beheer van Engelen N.V., Van Engelenweg 21A
Willemstad, Curacao (Netherlands Antilles)

BestPoker
Best Global N.V. dba Best Poker
BS Building, Level 1, Triq Il-Mosta,
Lija, LJA 9012, Malta

Bet365
Bet365
Hillside, Festival Way, Stoke-on-Trent
Staffordshire, ST1 5SH, United Kingdom

Betanysports Casino and Sportsbook
Betanysports Casino and Sportsbook
Edificio Equus
San Jose, Costa Rica

Betclic
Managas Gaming Malta Limited dba Betclic
Level 3, Tagliaferro Business Center; High St c/w Gaiety Ln
Sliema, SLM1551, Malta

Betcoin.ag
Global Limiting Holding EOOD dbaBetcoin.ag
Nikola Vaptsarov Blvd
Sofia, Bulgaria

BetCris
TV Global Enterprises Ltd dba BetCris
Villa Seminia, 8 Sir Temi Zammit Ave
Ta’Xbiex, XBX1011 Malta

BETDAQ
LC International Limited dba BETDAQ
Ste 6, Atlantic Suites
Gibraltar, Gibraltar

BETDSI
Diamond Sportsbook International dba BETDSI
Santa Ana
San Jose, Costa Rica

Betfair
PBB Counterparty Services Limited dba Betfair
Triq il-Kappillan Mifsud
St. Venera, SVR1851, Malta

Betfred
Petfre (Gibraltar) Limited
5/2 Waterfront Place
Gibraltar, Gibraltar

Betmost Poker
WHG (International) Limited dba Betmost Poker
6/1 Waterfront Place
Gibraltar, Gibraltar

Betonline
BLS International dba Betonline.ag
cs@betonline.ag
Panama City, Panama

Betsafe
BML Group Ltd Limited dba Betsafe Poker
Betsson Experience Center, Ta’Xbiex Seafront
Ta’Xbiex, XBX1027, Malta

Bettson
BML Group Ltd dba Bettson
Betsson Experience Center, Ta’Xbiex Seafront
Ta’Xbiex, XBX1027, Malta

BetUS
Firepower Trading Ltd dba BetUS
Anthinodorou, 3 Dasoupoll, Strovolos
Nicosia, 2025, Cyprus

betusa.ag
Online Management Services dba betusa.ag
Jasmine Ct, Ste 17, Friar’s Hill Rd
St. Johns, Antigua

BetVictor
Victor Chandler International Ltd dba BetVictor
Ste 23, Portland House, Glacis Rd
Gibraltar, Gibraltar

Binance
Binance Marketing Services Limited
C85602 Melita Ct, Level 3, Triq Giusseppe Cali
Ta’Xbiex, XBX1420, Malta

Bitfinex (non-US users)
BFXNA Inc dba Bitfinex
Ste 13/F, 1308 Bank of America Tower, 12 Harcourt Rd, Central
Hong Kong, Hong Kong

Bitfinex (US users)
Finex Inc. dba Bitfinex
Chaucer Group Limited, 10 Lower Thames
London, E3R 6E14, United Kingdom

BitMax.io
BitMax.io
114 Lavender St, #09-88, Ct Hub 2
Singapore, 338729, Singapore

BitMex
100x Grouop dba BitMex
Second Flr, Capital City, Independence Ave, PO Box 1008
Victoria, Mahe, Seychelles

Bitrue
Bitrue Singapore Pte. Ltd.
73 Upper Paya Lebar Rd, #06-01C, Centro Bianco
Singapore, 534818, Singapore

Bitstamp
Bitstamp Ltd.
5 New Street Square
London, EC4A 3TW, United Kingdom

Black Chip Poker
BMX Entertianment S.A.
Sabana Sur, Edificio La Colmena Contigo a Grupo Sama
San Jose, Costa Rica

Blockchain
Blockchain.info
Rue de Merl, 741, Rue Phillipell
Luxembourg, 2340, Luxembourg

Bluetrade.com
Bleu Digital Enterprises Ltd
527, St. Paul’s St
St. Paul’s Bay, Malta

Bodog
Bodog
service@bodog.eu
Manila, Philippines

Bookmaker.eu
Costa Rica International Sports dba Bookmaker.eu
Edificio La Colmena; 75m W Contraloria de la Sabana Sur
San Jose, Costa Rica

Bovada
Lynton Limited Ltd dba Bovada
Craig Plaza, 51-55, Fountain St
Belfast, BT1 5EB, United Kingdom

Boylesports
Boylesports Ltd
Finnabair Industrial Estate, Dundalk
County Louth, Ireland

Bwin
ElectraWorks Limited dba BWIN
Ste 6, Atlantic Suites, Europort Ave
Gibraltar, Gibraltar

Cafe Casino
Lynton Limited dba Cafe Casino
Craig Plaza, 51-55 Fountain St
Belfast, BT1 5EB United Kingdom

Carbon Poker
PDC Global Collections Ltd dba Carbon Poker
19/21 Circular Rd
Douglas, Isle of Man

CaribSports
Carib International Entertainment Ltd dba CaribSports
35 New Rd
Belize City, Belize

Cashpoint
Cashpoint (Malta) Ltd.
Level 1, Salvu Psaila St
Birkirkara, BKR9077, Malta

Casino77
Mandarin Gaming NV dba Casino 77
Soho Office 3A, Edge Water Complex, Elia Zammit St
St. Julians, Malta

Celeb Poker
Wizplay OS (Cyprus) Limited dba Celeb Poker
Flat 22, 6 Tassou Papadopolou St
Agios Dometios, Nicosia, 2372, Cyprus

Celsius Network Limited
Celsius Network Limited
The Harley Bldg, 77-79 New Cavendish St
London, W1W 6XB, United Kingdom

CEX
CEX.io Ltd
24th Flr, One Canada Square, Canary Wharf
London, E14 5AB, United Kingdom

Click and Buy
Click and Buy International Ltd
6-9 Cynthia St
London, N1 9JF United Kingdom

Cloudbet
Halcyon Super Holdings BV dba Cloudbet
Pareraweg 45
Willemstad, Curacao

CoinEgg Ltd
CoinEgg Ltd
38 Hunstanton Ave
Birmingham, B17 8TA, United Kingdom

Coinmate
Confirmo Ltd. dba Coinmate
The Shard Floor 24/25, 26 London Bridge St
London, SE1 95G, United Kingdom

ComeOn! Poker
Co-Gaming Limited dba ComeOn! Poker
3rd Flr, Spinola Park, Tirq Mikiel Ang Borg
St. Julians, SPK1000, Malta

Coral Poker
Gala Interactive (Gibraltar) Ltd dba Coral Poker
Ste 6, Atlantic Suites
Gibraltar, Gibraltar

Crypto.com
Foris Dax, Inc. dba crypto.com
Unit 1506-07, 15/F, Pacific Plaza 418, Des Voeux Rd W
Hong Kong, Hong Kong

Crypto.games
MuchGaming B.V. dba crypto.games
Fransche Bloemweg 4
Willemstad, Curacao

CryptoPay
CryptoPay
WeWork Bldg, 12 Hammersmith Grove
London, W6 7AP, United Kingdom

CurrencyFair
CurrencyFair Ltd
Colm House, 91 Pembroke Rd
Ballsbridge, Dublin, Ireland

Dafabet
Bayvieew Technologies Ltd dba Dafabet
RCBC Plaza, Makati
Cagayan Valley, Philippines

ecoPayz
PSI-Pay Ltd dba ecoPayz
Afon House, Worthing Rd
Horsham, West Sussex, RH12 1TL, United Kingdom

Electrum [Bitcoin Wallet]
Electrum
63-65 Blvd Massena
Paris, 75013, France

Entropay
Ixaris Systems (Malta) Ltd. dba Entropay
2 Stephen St
London, W1T 1AN, United Kingdom

Expekt Sportsbook
Mangas Gaming Malta Limited dba Expekt Sportsbook
Level 3, Tagliaferro Business Center, High St c/w Gaiety Ln
Sliema, SLM1551, Malta

Fabulous Poker
Investments Manager, S.A. dba Fabulouspoker.com
Sabana Sur
San Jose, 10000, Costa Rica

Fairlay
Fairlay LLC
200 Meters norte de la Cruz Roja de Santa Ana, 8vo Piso
San Jose, San Rafael, Costa Rica

Foxbit
Foxbit
Av. Eng. Luis Carlos Berrini, 550; Cidade Moncoes
Sao Paulo, Brazil

FTX
FTX Trading Ltd.
Lower Factory Road, PO Box 990
St. John’s, Antigua and Barbuda

Gala Poker
LC International Limited dba Gala Poker
Ste 6, Atlantic Suites
Gibraltar, Gibraltar

Gate.io
Gate.io
PO Box 31119, Grand Pavilion, Hibiscus Way; 802 W Bay Rd
Grand Cayman KY1-1205, Cayman Islands

Gatehub
GateHub Limited
Level 3, 207 Regent St
London, W1B 3HH, United Kingdom

gbets
Dynamex (Pty) Ltd dba G-bets
PO Box 7383, Westgate
Roodeport, 1734, South Africa

GGPoker
GG International Limited dba GGPoker
8 Upper Dukes Rd
Douglas, IM2 4BA, Isle of Man

Global Poker
VGW GP Limited dba Global Poker
5-7 Matilda Ct, Giuseppe Cali St
Ta’Xbiex, XBX1423, Malta

Goalwin Poker
Merkur Interactive Italia SpA dba Goalwin Poker
Via dei Lavorsatirn 136/138 20092
Cinisello Balsamo, Italy

GTBets
gtbets.eu dba GTBets
support@gtbets.eu
Willemstad, Curacao

Heritage Sports
Heritage Sports
customerservice@heritagesports.com
San Jose, Costa Rica

HitBTC
Hit Tech Solutions Development Ltd dba HitBTC
Ste 15, Oliaji Trade Centre, Francis Rachel St
Victoria, Mahe, Seychelles

Huobi
Huobi Technology Holdings Ltd
Rm 1404-05, 14F, Nan Fung Tower 88
Hong Kong, Hong Kong

Iconomi
Iconomi Ltd
10 Orange St
London, WC2H 7DQ, United Kingdom

Ignition Casino
Lynton Limited dba Ignition Casino
Craig Plaza, 51-55 Fountain St
Belfast, BT1 5EB, United Kingdom

Intertops
International Gaming & Entertainment Ltd dba Intertops
PO Box W427, Teledome bldg, Old Parham Rd
St. John’s, Antigua & Barbuda

Interwetten
Interwetten Gaming Ltd.
2nd Flr, Global Capital Bldg, Testaferrata St
Ta’Xbiex, XBX1403, Malta

iPoker
Playtech (Cyprus) Limited dba iPoker
Ground Flr, St. George’s Ct, Upper Church St
Douglas, IM1 1EE, Isle of Man

Iron Poker
Universe Entertainment Services Malta Limited dba Iron Poker
Level 3, Valletta Buildings, South St
Valletta, VLT1103, Malta

J88 Poker
J88Ent Ltd dba J88 Poker
Unit 1101, 11th Flr, Tower 1, Enterprise Square, No. 9, Sheung Yuet Rd; Kowloon Bay
Hong Kong, Hong Kong

Jazz Sports
DPT Sports Group dba jazzsports.ag
DPT Building, Pavas
San Jose, Costa Rica

Juicy Stakes Poker
Thinkquick Ltd dba Juicy Stakes Poker
3997 Armory Bldg
Basseterre, St. Kitts (Saint Kitts and Nevis)

Justbet.co
Investments Manager, S.A. dba Justbet.co
Edificio La Colmena
San Jose, Costa Rica

Just Dice
Just-Dice.com
PO Box 0823-03411
Panama City, Panama

KuCoin
KuCoin Co., Limited
20 Science Park Rd
Singapore, Singapore

Ladbrokes
LC International plc
Ste 6, Atlantic Suites
Gibraltar, Gibraltar

Ledn
Ledn (USA) Inc.
700-350 Bay St
Toronto, ON, M5H 2S6, Canada

Libertyslots.lv
Liberty Slots Group dba Libertyslots.lv
support@libertyslots.com
Willemstad, Curacao

Livecoin
Red Velvet Investments Ltd dba Livecoin
help@livecoin.net
Belize City, Belize

LooseLines
DPT Sports Group dba looselines.ag
DPT Building, Pavas
San Jose, Costa Rica

Lowvig
Lowvig.ag
support@lowvig.ag
San Jose, Costa Rica

Luxon Payments
Luxon Payments Ltd
Cobden Chambers, Pelham St
Nottingham, NG1 2ED, United Kingdom

MarathonBet
MarathonBet.com
Abraham de Veerstraat 9
Willemstad, Curacao

Matchbook
Triplebet Limited dba Matchbook
Inchalla, Le Val
Alderney, GY9 3UL, Channel Islands (Guernsey)

Mercatox
104363744 Ltd dba Mercatox
Mailboxes E.T.C., Peel House 30
Altincham, WA14 2PX, United Kingdom

MuchBetter
MIR Limited UK Ltd dba MuchBetter
Finance House, 20/21 Aviation Way
Southend, Essex, SS2 6UN, United Kingdom

MyBookie.ag
Duranbah Limited N.V. dba MyBookie.ag
7 Abraham de Veerstraat
Willemstad, Curacao (Netherlands Antilles)

Natural8.com
Run Good N.V. dba Natural8.com
9 Abraham de Veerstrat
Willemstad, Curacao (Netherlands Antilles)

NetBet
NetBet Enterprises Ltd dba NetBet
209, Marina Street
Pieta, PTA9041, Malta

Neteller
Paysafe Financial Services Ltd. dba Neteller
Compass House, Vision Park, Chivers Way
Cambridge, CB24 9BZ, United Kingdom

Nexo Financial LLC
Nexo Financial LLC
1 Canada Sq, Level 39, Canary Wharf
London, E14 5AB, United Kingdom

Nitrogen Sports
Nitrogen Sports
support@nitrogensports.eu
San Jose, Costa Rica

Nordic Bet
BML Group Ltd dba NordicBet
Betsson Experience Center, Ta’Xbiex Seafront
Ta’Xbiex, XBX1027, Malta

Noxwin
Galaxy Grouop Ltd dba Noxwin.com
Intershare Chambers
Road Town, Tortola, British Virgin Islands

Oanda Europe
Oanda Europe Limited
Flr 3, 18 St. Swithin’s Ln
London, EC4N 8AD, United Kingdom

Oddsmaker Casino
OddsMaker.ag
support@oddsmaker.ag
Curacao, Curacao (Netherlands Antilles)

OKEx
Aux Cayes FinTech Co. Ltd dba OKEx
Unit 10-02, Level 10, Menara Binjai, No. 2, Jalan Binjai
Kuala Lumpur, 50450, Malaysia

OKPoker
Loto Quebec dba OKPoker
500 Sherbrooke St W
Montreal, QC H3A 3G6 Canada

Pacific Poker
Cassava Enterprises (Gibraltar) Limited dba Pacific Poker
Suite 601-701, Europort Ave
Gibraltar, Gibraltar

PaddyPoker
PBB Counterparty Services Limited dbaPaddyPoker
Triq il-Kappillan Mifsud
St. Venera, SVR1851, Malta

Party Poker
Electra Works dba Party Poker
Suite 6, Atlantic Suites, Europort Ave
Gibraltar, Gibraltar

Pinnacle Sports
Ragnarok Corporation N.V. dba Pinnacle.com
Pletterjweg 43
Willemstad, Curacao (Netherlands Antilles)

Planetwin365 Poker
SKS365 Malta, dba Planetwin365 Poker
Corso Vittoria Emanuel 11, 282-284
Rome, 00188, Italy

Players Only
Gaming Ventures Ltd. dba Players Only
60 Nevis St
St. John’s, Antigua (Antigua and Barbuda)

Poker4u
Olincorp Limited dba poker4u
7, Florints St, Greg Tower, 6th Flr
Nicosia, 1065, Cyprus

Poker770
Mandarin Gaming NV dba Poker770
PO Box 4920
Curacao, Netherlands Antilles (Curacao)

Pokerhost
PH Multitech Curacao N.V. dba Pokerhost
E-Commerce Park, Vredenberg
Willemstad, Curacao, (Netherlands Antilles)

PokerKing
King Enterprises BG Ltd. dba PokerKing
Plaza P.L. Brion Unit 4
Willemstad, Curacao

PokerStars
Rational Intellectual Holdings Limited dba PokerStars
Douglas Bay Complex, King Edward Rd
Onchan, IM3 1DZ Isle of Man

PokerStars.eu
Rational Intellectual Holdings Ltd dba PokerStars.eu
Villa Seminia, 8, Sir Temi Zammit Ave
Ta’Xbiex, XBX1011, Malta

PokerStars.fr
REEL Malta Limited dba PokerStars.fr
Villa Seminia, 8, Sir Temi Zammit Ave
Ta’Xbiex, XBX1011, Malta

Poloniex
Polo Digital Assets, Ltd. dba Poloniex
F20, 1st Floor, Eden Plaza
Eden Island, Seychelles

PPPoker
AceKing Tech Limited dba PPPoker
OMC Offices, Babrow Bldg
The Valley, 2640, Anguilla

PredictIt
PredictIt Europe Limited
6 Agar St
London, WC2N 4HN, United Kingdom

PS3838.com
Ragnarok Corporation dba ps3838.com
Pletterjweg 43
Willemstad, Curacao (Netherlands Antilles)

Red Kings
SkillOnNet Ltd. dba Red Kings
Office 1/5297 Level G, Quantum House, 75 Abata Rigord St
Ta’Xbiex, XBX1120, Malta

Red Stag Casino
DeckMedia.NV
Heelsumstraat 51, E-Commerce Park
Willemstad, Curacao

RedStar Poker
RSP Entertainment N.V. dba RedStar Poker
12 Georgiou Grive Digeni, Stephanie House, Office 101
Nicosia, 3101, Cyprus

Run It Once [Poker]
Run It Once Ltd.
35 Strait St
Valletta, VLT1434, Malta

Skrill (formerly Moneybookers)
Skrill Limited
Floor 27, 25 Canada Square
London, E14 5LQ, United Kingdom

Skybook Sportsbook and Casino
Azure Ventures Limited dba Skybook Sportsbook and Casino
G1, Haven Ct, 5 Library Ramp
Gibraltar, Gibraltar

slots.lv
Lynton Limited dba slots.lv
Craig Plaza, 51-55 Fountain St
Belfast, BT1 5EB, United Kingdom

Smarkets
Smarkets (Malta) Limited
The Hedge Business Center, Level 7, Triq Ir-Rampa ta’ San Giljan
St. Julians, STJ1062, Malta

Sorare
Sorare SAS
5, Avenue du General de Gaulle
a Saint Mande, 94160, France

sportbet.com
5Dimes Casino and Sportsbook dba sportbet.com
Edificio Equus
San Jose, Costa Rica

Sports Interaction
Mohawk Online dba Sports Interaction
2006 Old Malone Rd, PO Box 1539
Kahnawake, QC, J0L 1B0, Canada

Sportsbetting.ag
Blue High House S.A. dba Sportsbetting.ag
Area Bancaria, Avenida Balboa
Panama City, Panama

Sportsbook
Paddy Power Betfair dba sportsbook.eu
Belfield Office Park, Beech Hill Rd
Clonskeagh, Dublin, 4, Ireland

swcpoker
OrangeWebsite.com dba swcpoker (aka Seals With Clubs, swcpoker.eu)
Kapparstigur 7
Reykjavik, Iceland

The Greek
WS Processing Ltd. dba The Greek Sportsbook
#1 Mangrove Way, M.B.F.Z.
Freeport, Montego Bay, Jamaica

Tiger Gaming
Troy Logic Limited dba Tiger Gaming
170, Patar House, Level 1 (Ste A203), Psaila St
Birkirkara, BKR9077, Malta

Titan Poker
Universe Entertainment Services Malta Limited dba Titan Poker
Level 3, Valletta Bldgs, South St
Valletta, VLT1103, Malta

TrransferWise
TransferWise
6th Flr, The Tea Bldg, 56 Shoreditch High St
London, E1 6JJ, United Kingdom

True Poker
BMX Entertainment dba True Poker
71C Georgio A, Office 3, Germasogeia
Limassol, 4047, Cyprus

Unibet
Trannel International Ltd. dba Unibet
Level 6, The Centre, Tigne, Point
Sliema, Malta

Vietbet
5Dimes Casino and Sportsbook dba Eurobet
Edificio Equus, San Pedro de Montes de Oca, 7mo Piso
San Jose, Costa Rica

WagerWeb
WagerWeb.ag
support@wagerweb.ag
San Jose, Costa Rica

William Hill
WHG (International) Ltd
6/1 Waterport Place
Gibraltar, Gibraltar

Winamax.fr
Winamax
CS 50746, CEDEX 07
Paris, 75345, France

Winner Poker
Universe Entertainment Service Malta dba Winner Poker
Level 3, Valletta Bldgs, South St
Valletta, VLT 1103, Malta

WPTPoker.com
Electraworks Limited (bwin.party digital entertainment plc) dba WPTPoker
Ste 711, Europort
Gibraltar, Gibraltar

Yobit
Yobit.net
support@yobit.net
Moscow, Russia

Youwager.eu
Dowson Universal Technologies Limited dba Youwager.eu
20 Stuart Ct
Consett, County Durham, DH8 5GA, United Kingdom (hide)

If anyone has additions or corrections to the list feel free to email them to me.

Tags:FBAR
Posted in Cryptocurrencies, FINCEN, Gambling, International | Comments Closed

On NFTs, DeFi, DAOs, and Staking: Cryptocurrency Taxation (2022) (Part 1)

Sunday, February 6th, 2022

With NFTs (non-fungible tokens), DeFi (decentralized finance), DAOs (decentralized autonomous organizations), and staking the rage in cryptocurrency, there are a lot of questions on what this means for taxes. Then on Friday I see headlines like, “IRS Will Not Tax Unsold Staked Crypto As Income.” So before I move toward NFTs et. al., let’s start with this report and staking. And even that has issues as there are many different kinds of staking.

Here, the staking involved is for Tezos. The taxpayers received about $9,400 of Tezos and they had to decide how it should be taxed. The problem is that while the IRS has ruled cryptocurrency is property, and how airdrops and similar things are taxed, the IRS has not given definitive guidance on staking. Should you use the principle that since you received $9,400 of value, you have $9,400 of income? (In that scenario, when you sell it you will have a capital gain or loss with $9,400 of basis.) Or should it be no income today but income tomorrow when you sell the Tezos? (Here, you would have ordinary income of whatever you sell the Tezos for.)

The major issue in determining what to do is that it has typically taken the IRS three years to issue rulings on cryptocurrency matters. When there is no law, regulation, or guidance, taxpayers are required to use general tax law principles. Given how the IRS has ruled on airdrops, it’s more likely than not the IRS will rule that the Tezos the taxpayer received were income when received.

Indeed, that’s what the taxpayers did on their originally filed tax return for the 2019 tax year. The taxpayers then filed an amended return asking for a refund (based on that $9,400 not being income). That they didn’t receive a response isn’t a surprise: It’s taking the IRS twelve months to process an electronically filed amended return; it’s taking 18 months for paper-filed amended returns. Under the law, if you file a “Claim for Refund” (which is done by filing an amended return asking for a refund) and the IRS doesn’t respond within six months, you can file a court action in federal District Court or the federal Court of Claims. The taxpayers filed a court case demanding the refund in District Court.

Last week, the federal government offered to give the refund. This led to those headlines stating unsold staked crypto is not income. Unfortunately, those headlines are anything but true today. (It is possible they may be true tomorrow, though.) The action by the Department of Justice could be for any number of reasons:

The IRS doesn’t like the fact pattern of this case, and would prefer to fight a different case;
The IRS wants to delay this issue until they have more time to study it; or
The Department of Justice looked at the cost of fighting this case and the dollar amount of the refund, and decided it made economic sense to let the taxpayers have the refund.

Had the taxpayers accepted the refund (they did not), this would not have led to a precedential ruling that unsold staked crypto is not income. It would have been solely related to those taxpayers and that fact pattern (the Tezos they received). Had the taxpayers received some other crytpo via staking in 2020, they would have had to fight the IRS again. It definitely would not have been applicable to any other taxpayers.

As I noted, the taxpayers did not accept the US government offer, so the case moves forward. As of today, there is no trial date scheduled. It is possible that the judge will rule in favor of the US government or the taxpayers. Given that there is no trial date, it’s possible there will not be a ruling in this case until 2023. If the government wins, I would expect the taxpayers to appeal (to the Sixth Circuit Court of Appeals because the taxpayers reside in Tennessee); they have stated they would like to have a precedent set. If the taxpayers win, the US could just pay the refund amount or appeal. If they pay, that would lead to a nonprecedential case. It would be binding on the taxpayers and the IRS as to the fact pattern in the case, but it would not be binding on you or I. If the US appeals, it might or might not lead to a precedential decision; not all appellate ruling are considered precedential. Even if there is a precedential ruling, it would only be binding in Kentucky, Michigan, Ohio, and Tennessee (though other courts would likely look at the decision).

What does this mean for today? First, the headlines that unsold staked crypto isn’t income are not true. Everyone is still required to use basic tax principles in determining whether this kind of staking leads to immediate income (or not). In a later part of this series I’ll look a little more in depth at staking and explain why a taxpayer win in this case might not be a win (and could be a loss for taxpayers). We also have to consider how the doctrine of constructive receipt fits into staking. Second, the most conservative course of action is to include staking as income (when received). I believe it is more likely than not that’s how the court will rule. (The taxpayers do have some tax law on their side, though; this is definitely not a slam dunk case.) Third, until the court actually rules nothing has changed. The IRS offer to pay the refund could have nothing to do with the case itself. The best analysis of this case that I’ve seen is from the National Law Review; I would strongly advise anyone involved with cryptocurrency staking to peruse the linked article for a far better analysis of the matter than almost anything else I’ve seen. Finally, anyone involved in such staking should discuss this with their tax professional. There are some options as it relates to the 2018 tax year that fall off a cliff in April that taxpayers may want to consider. Additionally, there are options in how this activity is treated on your tax return that you and your tax professional should discuss.

(The court case is Jarrett v. United States, No. 3:21-cv-00419 (M.D. Tenn.).)

Tags:Jarrett v United States
Posted in Cryptocurrencies | Comments Closed

§1031 Exchanges for Cryptocurrency: The IRS Thinks Not

Saturday, June 19th, 2021

Back in September 2017 I wrote a piece titled, “Can You Use a §1031 Exchange to Defer Gain with Cryptocurrency?” The conclusion I drew was, “[M]ost exchanges of one cryptocurrency for another do not qualify as §1031 exchanges and it’s more likely than not that the IRS will rule that two different cryptocurrencies are not eligible for like-kind treatment.” Do note that after December 2017 you can only use a §1031 like-kind exchange for real property, so today the answer is clearly no.

It’s likely some taxpayer was audited on this issue by the IRS, and the auditor asked the Chief Counsel’s Office for whether a like-kind exchange (aka a §1031 exchange) was allowed for cryptocurrency. The Chief Counsel’s Office issued a memorandum that for Ether (ETH) from Bitcoin (BTC), Bitcoin for Litecoin (LTC), and Ether for Litecoin, the answer is no. The Chief Counsel’s office looked at the underlying character of the cryptocurrencies and found them to be different and, thus, not qualifying for a like-kind exchange.

While it’s nice to have my conclusion verified, this is now fairly irrelevant. As I noted above, today you can only do a §1031 like-kind exchange for real property. There are few taxpayers who will be impacted by this given that generally 2017 returns are beyond the statute date.

Posted in Cryptocurrencies, IRS | Comments Closed

Bozo Tax Tip #2: Ignore Cryptocurrency!

Thursday, May 13th, 2021

Three years ago was the last time I included cryptocurrency in my Bozo Tax Tips. No matter how you slice it, when you dispose of cryptocurrency you have a taxable event. In the view of the IRS, every disposal must be individually noted on your tax return. If you have thousands of transactions, you may have hundreds of pages of such transactions to include on your return. (Thankfully, we can attach pdf’s to tax returns with the details rather than having to enter them into software.) There are now numerous products available to help you with cryptocurrency taxation (in the United States).

Adding to the “fun” with cryptocurrency taxation is that it is taking the IRS three years to issue guidance on anything in crypto. Take DeFi (decentralized finance) with crypto. Perhaps we’ll see the IRS issue guidance by 2024 even though it’s impacting tax returns in 2020. We can always hope….

The IRS is active in one area: trying to find individuals who are ignoring cryptocurrency. Over the last month the IRS has successfully enforced summonses against Poloniex and Kraken. To date, most IRS enforcement efforts in cryptocurrency have been going toward the low-hanging fruit: individuals who have not reported their cryptocurrency. I do expect the IRS to start looking at auditing large users of crypto. Given Commissioner Rettig’s remarks on the Tax Gap, IRS management clearly believes that there’s a lot of tax dollars to be found in cryptocurrency.

There is one truism, though: If you don’t report your cryptocurrency gains (and losses), you’re violating the law. So if you need to take some time to figure it out before filing your 2020 returns, make an estimate of your gains (or losses) and file an extension. Or you can choose the Bozo behavior of ignoring your cryptocurrency.

Tags:BozoTaxTips
Posted in Cryptocurrencies | Comments Closed

If You Used Poloniex and Did Not Report Your Crypto…

Friday, April 2nd, 2021

…now is a very good time to amend your tax returns to include those cryptocurrency gains and losses. The Department of Justice announced that a federal court in Massachusetts ordered Circle Internet, the former parent company of Poloniex, and Poloniex to provide a list of all U.S. taxpayers who conducted at least $20,000 of transactions from 2016 through 2020. This is a “John Doe” summons, and is the same tactic the IRS used to get this information from Coinbase.

I would expect it will be at least 30 days before the information releases the Department of Justice, and then several more weeks (to months) before the IRS starts comparing the lists of individuals with Poloniex transactions to filed tax returns. If you forgot to include Poloniex sales on your tax returns (or if your actions were more deliberate), you have a window to act. It is almost always better to come clean to the IRS before they send you a notice.

Tags:Bitcoins, Coinbase, Poloniex
Posted in Cryptocurrencies, IRS | Comments Closed

IRS Looking for “Hidden Treasure” (Unreported Cryptocurrency Income)

Monday, March 8th, 2021

The IRS’s Director of the Office of Fraud Enforcement, Damon Rowe, announced at a conference that the IRS has started “Operation Hidden Treasure.” The IRS is looking for individuals (and businesses) which had cryptocurrency income but didn’t report it on their tax returns. The IRS is investing in technology to look through the blockchain and find those sales. What does this mean for the individual who hasn’t reported his cryptocurrency sales?

First, it’s clear that the IRS thinks there’s gold in ‘dem ‘dar hills. And based on what I’ve seen over the last few years, they’re correct: There are plenty of taxpayers who thought (and think) that if there’s no tax form, there’s no reason to report income. This is absolutely the case for some traders in cryptocurrency. Some of the individuals who traded are young and simply didn’t (or don’t) know that the US tax system is based on self-reporting income and that all income is taxable unless Congress exempts it.

Let’s say you didn’t report a few hundred dollars in sales. Simply amend your return, report the additional sales, and pay the tax (and interest). Don’t forget to amend your state return, too, if applicable. You are not the target of Operation Hidden Treasure.

Let’s say you have $500,000 or more of unreported capital gains from cryptocurrency. You should contact a tax attorney–you are the target of the IRS. It’s almost always better for you to come forward rather than the IRS to come after you. But at this level of unreported income you likely need formal representation from an attorney, and a tax attorney can give you specific advice for your situation. Criminal tax fraud includes possible jail time; civil tax fraud carries a whopping 75% penalty. It’s better to be compliant than to be facing those penalties.

Another option–one I strongly recommend against–is playing “audit roulette.” The IRS won’t find me; my transactions are too hidden or (whatever). There is no statute of limitations on civil tax fraud. (Yes, the burden of proof is on the IRS but if you have $1 million of unreported cryptocurrency sales and the IRS can prove it, that’s a pretty good ‘badge of fraud.’)

Will the IRS find some hidden treasure of unreported cryptocurrency sales? Absolutely. If this is you, it’s time to come clean.

Posted in Cryptocurrencies, IRS, Tax Fraud | Comments Closed

When Acquire Doesn’t Mean Acquire

Thursday, March 4th, 2021

It’s time for today’s lessen in double-speak, or bureaucratese, courtesy of the IRS. On the top of Form 1040, just below your address is a question:

At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?

It seems simple: If you bought any cryptocurrency, sold any, exchanged any, sent some, or received any, check the box marked “Yes.” Except that’s wrong, per the IRS. On March 2nd, the IRS updated their Frequently Asked Questions (FAQ) on cryptocurrency. If all you did was acquire (purchase) cryptocurrency, you can answer no:

Q5. The 2020 Form 1040 asks whether at any time during 2020, I received, sold, sent, exchanged, or otherwise acquired any financial interest in any virtual currency. During 2020, I purchased virtual currency with real currency and had no other virtual currency transactions during the year. Must I answer yes to the Form 1040 question? (3/2/21)

A5. No. If your only transactions involving virtual currency during 2020 were purchases of virtual currency with real currency, you are not required to answer yes to the Form 1040 question. [emphasis added]

As the National Taxpayer Advocate pointed out, the IRS wants information on individuals who had reportable sales of cryptocurrency. That would be sales, exchanges, and spending; it would also include individuals who received cryptocurrency for free (but not gifts). The IRS wants to make sure individuals who have taxable events with cryptocurrency have reported them on their tax returns.

Is it a problem if you answered “yes” but all you did was acquire cryptocurrency? Definitely not. The question is poorly written, and you answered truthfully based on the question. However, you might end up receiving an IRS notice if the IRS computer looks for taxable cryptocurrency activity on your return and doesn’t see any. The solution, which likely will be adopted for 2021 returns, is to change the question to read, “At any time during [the tax year], did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency in a reportable transaction?”

I give the IRS an “A” for knowing that many individuals are not reporting cryptocurrency activity on their tax returns, and a “D-” for writing questions.

Tags:2021.Tax.Season
Posted in Cryptocurrencies, IRS | Comments Closed

Online Gambling and Cryptocurrency Addresses for 2021

Friday, February 19th, 2021