In light of Ukraine invasion by Russia, the Internal Revenue Service (IRS) has joined forces with Ukrainian officials and Chainalysis, a blockchain analysis firm. Together, they are actively tracking down Russian individuals suspected of utilizing cryptocurrency to hide their assets.

The IRS is sponsoring a Chainalysis tool that enables crypto-related investigations. They plan to use it to provide virtual and in-person training sessions on tracking blockchain transactions for Ukraine.

Furthermore, the agency is working with overseas counterparts to pursue sanctions evaders. The aim of this is to enhance information-sharing and case development between the US and Ukraine.

Due to their susceptibility to financial frauds such as money laundering, market manipulation, and tax evasion, the IRS has intensified its focus on cryptocurrencies.

The unit also recovered $3.6 billion worth of Bitcoin stolen from the 2016 hack of crypto exchange Bitfinex. Additionally, it is currently conducting 23 ongoing sanctions-related probes.

Even more, the IRS is investigating Binance over alleged poor adherence to anti-money laundering (AML) and Know Your Customer (KYC) controls. In light of this, it has filed 45 claims totaling $44 billion in unpaid taxes related to the FTX case.

Legislators express worry over the use of cryptocurrency as a means to evade sanctions by Russia.

Government officials, financial experts, and cryptocurrency executives have been debating the potential use of cryptocurrency to evade international sanctions. This is causing major worry for legislators. Some experts argue that cryptocurrency’s transparency makes it unsuitable for large-scale money laundering, while others express concerns that sanctioned countries could exploit it for moving money around.

Brian Armstrong, the CEO of Coinbase, has stated that he does not believe Russian oligarchs are using cryptocurrency to avoid sanctions. He also argued that it would be more traceable than other payment methods. 

However, blockchain analysis firm Chainalysis has found that cryptocurrency has been used to launder money in the past. Likewise, that it is being used to fund terrorist organizations.

Ukraine IRS: An analysis web to depict Chainalysis' partnership with Ukraine IRS to monitor Russia.

As the use of cryptocurrency becomes more widely adopted, the debate over its potential for sanctions evasion is likely to continue.

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Tanishi is an established writer in the realm of cryptocurrency and blockchain, renowned for her expertise and insightful analysis. With a deep-rooted passion for the dynamic world of digital finance, Tanishi delivers compelling news and articles that captivate a wide-ranging audience.