IRS Accused of Overstepping in Blockchain Investigator Requests

Blockchain investigator ZachXBT has raised concerns about what he perceives as overly aggressive tactics used by the U.S. Internal Revenue Service's (IRS) Criminal Investigation Unit (CIU) in seeking his assistance for blockchain-related investigations.

Known for his expertise in tracing blockchain transactions, ZachXBT shared his experiences on X on March 6, expressing discomfort with the IRS's methods.

While ZachXBT is generally willing to assist victims and law enforcement, he feels the IRS has crossed personal boundaries.

His grievances include unannounced visits to former residences, unsolicited emails to personal accounts using private information, and physical mail, despite his availability through more conventional contact methods.

In one instance, an IRS special agent praised ZachXBT's "impressive work," particularly his skill with blockchain tracing tools, and sought his guidance on making significant contributions to the field.

However, ZachXBT criticized the IRS's approach as lacking professionalism, especially after he declined to support investors of the Complex (SIMPLE) memecoin following its collapse on April 4.

He expressed a preference for aiding genuine victims over those speculating on high-risk, unproven digital assets.

The IRS continues to strengthen its ties with key figures and organizations in the blockchain tracing sector, including a notable partnership with Chainalysis, a leading blockchain analytics company.

In May 2023, IRS-CI Chief Jim Lee emphasized the importance of these collaborations, stating that the fight against cryptocurrency-related crime would be "impossible" without the tools and infrastructure provided by such partnerships.

Thanks to these efforts, the IRS-CI has confiscated an estimated $10 billion in cryptocurrency since it began investigating various digital asset-related criminal activities, demonstrating the impact and significance of these investigative efforts.