This is tax fraud.
> How can the government arrest someone for stealing an asset that doesn't really exist?
“Buyer beware” doesn’t exempt someone from fraud statutes. Honest services fraud is broadly defined in most jurisdictions to include any economic activity.
> Would they arrest someone who stole water from my pool?
Yes. At the very least, the perpetrator would have trespassed.
Disclaimer: I am not a lawyer. This is not legal nor tax advice. Don’t commit fraud.
>>This is tax fraud.
It is not; you only have a tax liability when you cash out, not when you hold, you could cash out and have a gain or have a loss and you need to reflect that on your income tax for that year.
It depends [1]. If you receive the Bitcoins for goods or services, they are taxed as income. If you hold them as capital assets, the IRS won't tax you for holding, though your state or local jurisdiction may. Either way, not reporting those holdings is tax fraud.
[1] https://turbotax.intuit.com/tax-tools/tax-tips/Taxes-101/Tax...
Disclaimer: I am not a lawyer nor a CPA. This is not legal nor tax advice.
Should I pay tax on that gold when I sell it for cash? Yes.
Will the police help you when you call them to report it? I highly, HIGHLY doubt it.
It's easy to put your head in the sand and just say "yeah that guy committed a crime", but in reality, enforcement is really a lot more nuanced than that.
So like forgive me if I think it's a waste of tax money for Bharara and the courts and the police to go after Big Vern, while the Equifax guys are not pre-emptively detained while a fine is calculated.
With honest-services and securities fraud, the police are generally there to document, not enforce. If someone stole your WoW gold and you sued, you'd almost certainly have a case. If I were your lawyer (I'm not a lawyer), I'd send a letter to the relevant tax authorities and attorneys general, as a point of leverage during settlement talks. (This is not uncommon in lawsuits--
TL; DR No, one does not always get caught. I won't say I've always been faithful to every city's open-carry alcohol laws. But when you break such laws (a) it's still breaking the law which (b) exposes you to more than just the government.
> So like forgive me if I think it's a waste of tax money for Bharara and the courts and the police to go after Big Vern, while the Equifax guys are not pre-emptively detained while a fine is calculated
You're forgiven for having an opinion? I still disagree. We know there was criminal conduct on behalf of Big Vern. Not yet Equifax. Though on a higher level I agree, since ordinary people were harmed by Equifax. My sympathies for people who lose money in Bitcoin fraud is less, though I think that's a function of familiarity with the system.
I will do more digging but I don't know if anyone has gone to the police for WoW gold theft. I'm not sure why WoW gold is treated differently from Bitcoin, which is apparently an honest to god bonafide US security in the eyes of the law.
Re: your point about not always getting caught, then it sounds like we have an unequal application of the law/enforcement problem. Which I suppose is the crux of my entire argument.
Why are we going after Big Vern when there are more pressing crimes to deeply investigate? I even used his exchange and I literally don't care. The coins were numbers to me, not dollars.
Re: Equifax, plenty of suspected criminals are detained for years before any criminality is proven. Just look at all the pre-trial detentions on Rikers Island in NYC.
You have young kids being accused of marijuana possession or etc, suspected trespassing, and then they don't go before a judge for many many months.
Whereas with Equifax, you basically have smoking gun stock trade proof and admissions of guilt.
It can therefore only be true that the reason an interrogation of these Equifax officials has not occured, is because the law/enforcement is being applied unequally.
This is a silly argument, it's not an either or situation, law enforcement can and should pursue all crimes. By your logic, why go after any financial crimes where there are still unsolved murder cases? Do you see how absurd you're being?
> The coins were numbers to me, not dollars.
What your feels tell you has no bearing on the law; bitcoin is a commodity of value and like all commodities of value it's subject to law.
Law enforcement and governments don't have unlimited resources. Frivolous crimes should not be pursued as vigorously as crimes of violence and physical/financial/corporate victimhood.
Equifax executives are chilling in their house right now. Big Vern is wanted by the feds for loss of fictional assets. Come on, apply the law equally.
53% of prisoners are there for possession of marijuana. Surely you don't want your tax money spent on this victimless crime?
Well, it currently is being spent that way, while many murders go uninvestigated.
They're both commodities. People get away with not reporting WoW gold because the mean holder probably holds less than the mean holder of Bitcoin. As you observe, law enforcement resources are limited. That said, counting on flying under the radar is a horrible tax policy.
(It does not help that there is a (a) history of successful prosecutions surrounding Bitcoin, (b) a vocal group of Bitcoin enthusiasts arguing they aren't subject to tax and (c) a veritable black market around Bitcoin.)
> Equifax executives are chilling in their house right now. Big Vern is wanted by the feds for loss of fictional assets
Due process, my friend. The Equifax executives are being investigated; they have not yet been found guilty or even charged. One might argue they should be. But that's a discussion about what the law should be, not what it is. (That said, the insider trading charges look promising.)
As others have repeatedly mentioned, any delineation between "fictional" and "non-fictional" assets is itself a fiction. Arguing that something shouldn't be prosecuted because it isn't as illegal as murder is ridiculous. Better strategy: understand it's illegal, follow the law and organize to lobby to amend it.
Disclaimer: I am not a lawyer nor a certified accountant. This is not tax, accounting, legal or any other sort of advice.
You're using the word subjectively incorrectly; the word you seek is selectively.
Bitcoin assets are not fictional, they translate to real dollars, Big Vern stole tens of millions of dollars of other people's assets. You are minimizing this for some reason that you don't make clear.
Equifax didn't commit a crime, having lax security is not illegal, getting hacked is not illegal. They may be been unethical about not disclosing shit soon enough, but there's no obvious crime to charge anyone with, yet; that may change after an investigation. Big Vern however stole people's money, that's a clear crime.
Identity theft is a crime committed via Internet. It is lazily prosecuted.
Stock fraud ("securities" fraud) is a crime that is also vigorously prosecuted.
Bitcoin and alt coins, just like WoW gold, are not stocks. Therefore how can the state say Big Vern is committing securities fraud, and that we should spend millions of dollars attempting to "bring him to justice"?
EDIT:
Correct, I agree, but this occured in 2014 and would therefore be retroactive application of the law.
From what I remember, we were operating in a complete and total vacuum.
Big Vern's only mistake was being born a US citizen. If he was Russian, he would be a free man.
Not relevant, securities doesn't mean stocks. A security is basically any financial instrument of value, and crytpo's are most certainly securities and obviously always have been.
You need to get over this notion that "new" things are somehow not subject to existing laws. Slapping a new name like bitcoin on a financial security doesn't suddenly make it not a security; the law is not so trivially circumvented, the law doesn't need to mention a thing by name for it to apply to said thing.
You can't retroactively apply the law. Well apparently the government acts like they can. But in my (biased) mind they shouldn't.
How about.. when a law is wrong? or if it's not just? or is changed, for this matter? since you think it's retroactively applied, which way or which one of 2 or more conflicting law are/is 'applied' retroactively?
There aren't a lot of crimes you can't excuse this way (by substituting various countries in place of Russia).
[0]: http://www.businessinsider.com/bitcoin-price-security-equity...
I don't really understand what contract there is to legally enforce. Say I send some bits to Big Vern's site. One day, the bits aren't there anymore. If it was a legally incorporated real bank, and my bits represented real dollars or Euros or etc, then I would be fuming pissed and would be suing.
But Big Vern did not run a site with any express guarantees, and I did not send him any legal tender. So we were effectively operating in a legal vacuum.
One time I left my car at a repair shop. All the cars they had in the lot were stolen. The police didn't arrest the shop owner for negligence. They just went and tried to find the thieves.
Why then, do the authorities in the US and China aggressively pursue those people who ("steal", "lose") the coins of their depositors?
Big Vern, Karpeles, Pirate@40, just to name a few.
Sure, these guys lost people's coins. But I was there back then. It was all wild west stuff. Buyer beware.
How can the government arrest someone for stealing an asset that doesn't really exist?
Would they arrest someone who stole water from my pool?
Edit: I don't know why I bother commenting here.
A downvote without counterpoint? What do you gain from that?
Grapple with my assertions with evidence. If you don't, it will just become even more of an echo chamber.