Improved IRS criminal division management of sequestered digital assets sought

FedScoop reports that the Internal Revenue Service Criminal Investigation division has been urged by the Treasury Inspector General for Tax Administration to bolster its handling of digital assets confiscated from ransomware, money laundering, and drug and human trafficking operations, as well as tax crimes.

Aside from failing to properly document three of 299 seized digital assets worth over $2.8 million, IRS-CI also had lapses in protecting seized assets, with the agency once stating that it had no knowledge of wallets turned over by the FBI to an IRS-CI special agent, as well accidentally shreddinga government-controlled wallet's recovery seed phrase and converting a digital asset into another kind of asset during the sequestration process, according to the TIGTA report. IRS-CI also failed to track criminal activity post-asset seizure, said the report, which recommended the adoption of digital asset form preservation, safe case and evidence transfer policies, asset inventories, and updated pre-seizure guidance.