Federal Court Freezes 24 Crypto Wallets Tied to IRS Tax-Evasion Probe

COURT FREEZES 24 CRYPTO WALLETS IN IRS TAX PROBE

The U.S. District Court for the District of Columbia has granted the government’s request to seize or freeze twenty-four cryptocurrency accounts tied to an IRS tax-evasion probe. The ruling expands the government’s reach over digital assets in civil forfeiture actions and signals that crypto is no longer a tax haven.

The IRS began investigating after noticing large, unexplained transfers flowing through several blockchain addresses. Agents traced the wallets to individuals who had failed to report substantial capital gains. Rather than pursue criminal charges first, prosecutors filed an in-rem civil forfeiture complaint directly against the wallets themselves—treating the cryptocurrency as the defendant. The court had to decide whether digital assets can be seized under traditional asset-forfeiture statutes and whether the IRS had shown probable cause that the coins were traceable to unreported income.

Judge Dabney L. Friedrich ruled that cryptocurrency is “property” subject to civil forfeiture and that the government’s affidavit satisfied the probable-cause threshold. The twenty-four accounts—now frozen—are presumed forfeitable unless their owners step forward within thirty days to contest the seizure. Claimants who do appear will face the uphill task of proving the funds came from legitimate sources.

In plain English, the opinion confirms that the IRS can grab crypto the same way it grabs cash or real estate. No exchange account or private key is beyond reach once the government links it to unpaid taxes.

The decision widens the SEC-CFTC regulatory perimeter by showing that tax authorities can move first and fastest. Traders who thought mixing services or offshore wallets would shield gains now confront a concrete enforcement risk. Exchanges may see compliance teams step up KYC and subpoena responses, while DeFi protocols that allow easy movement of value face indirect pressure to embed reporting hooks. Stablecoin issuers could also feel the chill: every on-chain transfer leaves a permanent trail that can be weaponized in forfeiture cases.

For anyone holding crypto offshore or in privacy wallets, the message is simple: the taxman now has the map.