Volodymyr Kvashuk, a former Microsoft employee, convicted yesterday of tax fraud involving Bitcoin
Kvashuk was accused of fraud against his employer, Microsoft, for more than $10 million. The IRS reported that Kvashuk’s case was the country’s first bitcoin case involving tax fraud. The Microsoft engineer worked with the Washington-based technology company between August 2016 and June 2018.
During that time, he misused his access privileges to the company’s online sales platform. Kvashuk took advantage of his position to steal digital gift vouchers and profited by trading them on the Internet.
From his earnings, he bought a $160,000 Tesla as well as a $1.6 million house and hid the evidence of the crimes using his colleagues‘ email accounts. He also used a bitcoin mixer to process the winnings from the gift card sales and overshadow the paper trail.
When filling out the returns, he reported that the receipts were gifts from a relative. He grouped the taxable income from bitcoin into gifts, as they are not taxable according to the US tax code.
Upon completion of the case, Ryan L. Korner, an IRS-CI Special Agent, commented: „Simply put, today’s sentence proves that you can’t steal money over the Internet and think Bitcoin will hide its criminal behaviour. Our complex team of cyber crime specialists, with the assistance of the IRS-CI Cyber Crimes Unit, will hunt you down and hold you responsible for your mistakes“.
Kvashuk has been found guilty of a total of 18 crimes, i.e. 6 counts of money laundering and 2 additional counts of filing false tax returns, among others.
The US Department of Justice said: „During Kvashuk’s seven months of illegal activity, approximately $2.8 million in Bitcoin was transferred to his bank and investment accounts. Kvashuk then filed false tax return forms claiming that Bitcoin had been a gift from a relative“.
The 26-year-old was fined $8,344,586 and there is a possibility that he will be deported after serving his sentence. The lawyer’s office noted: „Stealing from your employer is bad enough, but stealing and making it look like your colleagues are to blame increases the damage beyond dollars and cents.