Fraud and Scams

Ex-Microsoft Software Engineer Used Funds From Bitcoin Tax Fraud To Buy Lake House and a Tesla

In what is exhibited as the first US criminal case that involves bitcoin (BTC) with a tax component, a software engineer was convicted to nine years of prison for 18 federal felonies linked to his scheme to defraud software giant Microsoft, his former employer, of more than $10 million.

The US Department of Justice declared in a statement that the criminal utilized a bitcoin mixing service to hide the funds’ source, eventually transferring into his bank account.

A US District Court declared the sentence in Seattle after a jury convicted Volodymyr Kvashuk, a 26-year-old Ukrainian citizen who first worked as a Microsoft contractor. He was the company’s employee from August 2016 until he was fired in June 2018. Kvashuk was found guilty of “five counts of wire fraud, six counts of money laundering, two counts of aggravated identity theft, two counts of filing false tax returns, and one count each of mail fraud, access device fraud, and access to a protected computer in furtherance of fraud,” the report stated.

The software engineer was involved in testing Microsoft’s online retail sales platform and used his access to steal currency stored value (CSV) such as digital gift cards. He then resold the CSV online, transferring $2.8 million worth of BTC to his bank and investment accounts beyond seven months.

DOJ stated that,

“Kvashuk then filed fake tax return forms, claiming the bitcoin had been a gift from a relative.”

Aside from this, the convict used the gains from his criminal activities to buy a $1.6 million lakefront house and a $160,000 Tesla vehicle.

Remarking on the cryptocurrency tax-related proportion of the case, Ryan L. Korner, a special agent at the Internal Revenue Service’s Criminal Investigations Department who was in charge of the case, stated that the

“sentencing proves you cannot steal money via the Internet and think that Bitcoin is going to hide your criminal behaviors. Our complex team of cybercrimes experts with the assistance of IRS-CI’s Cyber Crimes Unit will hunt you down and hold you accountable for your wrongdoings.”

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