Crypto vs IRS

Bank Accounts, Company Formations, Tax Planning, Residency Solutions, and more


New member
So I'm fairly new to crypto and I'm freaking out about tax season already. I recently spoke to someone who is into several mining projects such as BUSD paycheck, Baked Beans & Drip and all he does is transfer his earnings from his wallet to an exchange and then to his bank account in smaller amounts under 5k per month, while using a VPN. He explained to me that even though the exchange he goes through provides a CSV for taxes, he does not file since there is no law currently requiring US citizens to file our crypto, which I think is correct for the most part. He has gotten away with this for several years.
IF the government requires us to file, won't they connect his wallet addresses to his bank account and make him pay back taxes?

For myself, I started by getting into several mining projects as well. I've been transferring my earnings to my online wallet which has a huge record of all of my transactions and from there, I've been transferring everything into my ledger. So far, I haven't transferred anything into my bank account.

What I'm wondering is if I do the same thing and transfer under 5k per month in smaller amounts straight into my bank account from an exchange, wouldn't the exchange record each transaction coming from a singular wallet? If I don't file and the IRS doesn't catch my activity, I'll likely get away with it, correct? If I DO file, how would they know if it's capital gains/losses or long or short term holdings since they're just a bunch of random transfers? Also if they pass a law requiring us to pay and file crypto taxes, would I just be screwing myself since my earnings wouldn't add from years of earnings? Lastly, wouldn't I ahave to fork over my metamask wallet transactions? This is specifically concerning US law.

I appreciate any help!

Lastly, if I convert all of my crypto to Monero, crypto note or turtlecoin BEFORE I transfer it into my bank account, would I totally mask where the funds are coming from?
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Active Member
You already have to pay taxes on crypto to crypto transfers even in the USA. Their is a check box on the very top of your US tax forms that asks if you have bought, sold, sent, received cryptocurrency during the calender year. You already do have to file and pay taxes on cryptocurrency lol. Using a VPN here is doing absolutely nothing and neither is the amount of money being transfered.

The only reason the guy you know has not been caught is incredibly simple... the US audit rate is dirt low on returns and the exchange he is using is not sending this data to the IRS annually, however they certainly have it on file. If he is audited he will be caught in 0.2 seconds for the whole dollar amount and all of the years.

If you convert it all to a privacy coin like XMR then transfer it to your bank account you are still accomplishing nothing and they will just assume it is 100% taxable income irrespective of what your cost basis was.

Pretty much everything you wrote here is incorrect/is a time bomb. For some reason the worst tax evasion strategies I hear come from cryptocurrency investors which is so comical since it's so incredibly easy to evade taxes related to cryptocurrency but for some reason a huge chunk of that crowd cannot figure it out and posts stuff like this.

If I transfer $5K from my wallet to a KYC'ed exchange and send it to my KYC'ed bank account will the IRS be able to find my income? Ask yourself how stupid this sounds sorry to be harsh.

If your crypto was onramped through a KYC source the government can alreayd know it exists and if it's off ramped through a KYC source same thing. The only reason the guy you know isnt caught is merely due to a low low chance of an audit unless you have an extremely high income or extremely low income in the USA.


You have to file and reports all your trades and capital gain (loss) to the IRS, you must be naive thinking Uncle Sam would let you off without its cut of the pie.

You should consult with a tax professional instead of listening to unqualified folks.


New member
Don't freak out and just familiarise yourself with the applicable taxes (most likely capital gains) and pay them.
The only other point I will make is to add to @Vor's excellent post that US, like much of the civilized world runs a tax system based on self-assessment and voluntary reporting. As a tax resident (or US citizen) you are required to figure out how much tax you owe and file a correct tax return. (period)

The government may audit your tax return at which point you would need to provide the supporting documents for how you arrived at your self-assessment. The government may also challenge your evidence and/or return if they have grounds to believe that you've made an error.

By not declaring the income your friend is committing tax evasion (which may carry criminal liability Tax Evasion Penalties and Other Consequences - FindLaw). All other steps he is undertaking are superfluous.

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