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Engineer Uses Bitcoin to Defraud Microsoft of $10M, Evade Taxes

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Bitcoin is regularly blasted by regulators and the IRS for its use in illicit crime such as money laundering or tax evasion. Unfortunately, a story involving a former Microsoft engineer who used the cryptocurrency to mix over $10 million he had defrauded the company out of, doesn’t help that case.

Here’s how one man managed to steal so much money right out from under the tech giant’s nose, and how they got caught using Bitcoin to hide the trace of their mysterious income.

How the Birth of Cryptocurrency Coins is the Next Phase of Digital Value Transfer

Cryptocurrencies are most popular amongst millennial investors for a number of reasons. Those born from the Boomer generation, don’t trust the stock market, are well versed in a predominantly digital lifestyle, and have been collecting virtual currencies for a good portion of their lives.

Video games have long used coins as a way to score performance and encourage players to keep on collecting. Eventually, as digital platforms like gaming, movie, and music streaming services exploded, value-based gift cards adorning digital codes became commonplace, acting as a native currency to whatever platform the card was designed for.

RELATED READING | GOING DIGITAL: BITCOIN BEATS GOLD AND SILVER IN YEAR-TO-DATE RETURNS

Apple had wild success with iTunes cards, for example, while Microsoft and several others followed the lead and launched digital gift cards.

Volodymyr Kvashuk, a former Microsoft engineer, defrauded the tech firm out of $10 million according to a new case, using these digital gift cards and Bitcoin.

 

Bitcoin sets new 2020 high and first higher high since the peak | Source: BTCUSD on TradingView.com

Bitcoin Used to Evade Taxes, Steal $10 Million from Microsoft

The case, according to the IRS, is the first tax case involving Bitcoin. They’re likely using it to set a precedent against crypto-related tax crime, and Kvashuk is looking at nine years, and over $8 million in restitution to be paid.

The case asserts that Kvashuk sold digital value gift cards in exchange for Bitcoin, and hid his tracks by using colleagues test emails related to the company’s online retail services platform.

RELATED READING | THIS ONGOING BITCOIN WALLET HACK HAS STOLEN $22 MILLION IN BTC

How Kvashuk eventually got caught, is that he likely raised several red flags when he suddenly deposited $2.8 million in BTC to a bank account to purchase a $1.6 million lakefront home and new Tesla.

Kvashuk claimed on his taxes that he received the Bitcoin from a family member as a gift and therefore didn’t have to pay any taxes on the income. The sizeable amount potentially promoted the investigation.

The significance of this case is both due to it being the first of its kind for the IRS and is a sign that the tax enforcement arm of the United States has become increasingly adept at tracking Bitcoin transactions.

Featured image from Deposit Photos, Chart from TradingView.com



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3 things traders are saying about Bitcoin and the state of the bull market

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Bitcoin’s (BTC) dip below $29,000 on June 22 rocked the markets a handful of analysts to call for a potential drop below $20,000. 

Many traders on crypto Twitter were focused on the formation of a death cross on the Bitcoin chart as an omen for another potential drop in the price but analysts with a more contrarian point of view look at this chart pattern as a signal that it is time to buy the dip. 

Three reasons why some traders still see a bull case for Bitcoin include the appearance of the “spring” stage of the Wyckoff accumulation model, steady buying by long-term holders and the formation of a bear trap at the golden ratio that is similar to moves seen during previous bull runs.

The Wyckoff model says spring has arrived

The Wyckoff accumulation model has been all the rage amongst cryptocurrency analysts over the past month as the price action for Bitcoin has been tracking the pattern relatively closely since the May 19 sell-off.

As seen in the tweet above, Bitcoin’s plunge below $29,000 and the subsequent recovery above $32,000 has some analysts suggesting that the “spring test” seen in phase C of the Wyckoff pattern has been fulfilled. This would indicate that the bottom is in for the current correction and now begins the choppy climb higher.

If this turns out to be true, BTC would enter phase D, also known as the “markup phase” where a new uptrend is established and “pullbacks to new support offer buying opportunities” that are often seen as opportunities to buy the dip.

Related: Bitcoin drops below $36K as century-old financial model predicts big BTC crash

In phase D a breakout to new highs is expected as the cycle completes and prepares to potentially begin again once the move higher is exhausted.

Long term holders are still bullish

Another bullish sign cited by analysts is the steady accumulation by long-term holders.

The Bitcoin long-term net holder position shows that investors actually began to reaccumulate back in late April and they began to significantly increase their activity in May as the price fell into the $30,000 to $40,000. On-chain data shows that these investors have continued to buy into the most recent dip.

This activity suggests that more experienced crypto traders are familiar with Bitcoin’s market cycles and view the current range as a good level to open long positions when fear is high and the sentiment is low. 

The biggest rewards go to those who take the risk to buy an asset amid plunging prices and sentiment, and these are the types of situations where the contrarian traders thriv.

A bear trap lurks at the golden ratio

The third scenario some analysts are focusing on suggests that the current price movements have set up a bear trap that echoes a move seen during the last cycle which involves a pullback to the 1.618 golden ratio extension level which will then be followed by a breakout to new highs.

From this perspective, the market is currently in the awareness phase of the four psychological stages of asset bubbles. After the bear trap occurs, Bitcoin will enter the mania phase where widespread media coverage attracts the attention of new market participants who then chase the price to ever-increasing heights “based on the delusion that the asset will keep going up, forever.”

Previous calls for the possibility of Bitcoin reaching a price of $200,000 by the third or fourth quarter of 2021 by veteran trader Peter Brandt, who was far from alone in predicting its value to surpass the $100,000 mark this year, would suggest that the long-expected blow-off top is yet to come.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.