Since 2011, the Internal Revenue Service (IRS) in the United States has been actively tracking and investigating crimes involving digital assets. To aid in their efforts to detect and seize illicit assets, the IRS-CI has made use of a suite of blockchain analysis tools developed by Chainalysis. The partnership between the IRS and Chainalysis has become invaluable, with IRS-CI Chief Jim Lee stressing that their efforts to investigate crypto-related crimes would be near 'impossible' without Chainalysis's technology.

The IRS-CI has led to the seizure of an estimated $10 billion worth of cryptocurrency, most notably $3.6 billion from an infamous 2016Bitfinex hack. The seized crypto has since dropped in value, leading the IRS-CI to figure out how to safely manage large sums of digital assets. Chief Lee advises that simple considerations for crypto custody become increasingly difficult when dealing with huge sums of digitized value.

Aside from the seizures themselves, another main component of the IRS-CI's mandate has been sharing knowledge and skills to use Chainalysistools with local and international crime enforcement. To help with this, Lee's visit to Europe in May 2023 included the training of over 60 different Ukrainian officials from multiple law enforcement agencies and the donation of Chainalysis Reactor licenses to facilitate blockchain and cryptocurrency tracing in the ongoing Russian-Ukrainian conflict.

Overall, the IRS-CI is committed to eradicate the use of digital assets for criminal purposes, and has made great strides in its mission with the help of blockchain analysis technology. With the increased applicability and everyday usage of cryptocurrency, the IRS-CI is likely to become even more active and proactive in tracking nefarious actors in the digital space.



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