The growth of crypto trading has led to a huge increase in a number of resources for handling taxes on crypto profits. But for every expert or influencer offering clarity on how to properly pay taxes on capital gains from crypto trades, there seems to be another person offering insight into tax avoidance. In fact, platforms like YouTube and TikTok are filled with videos with titles like “Crypto Tax Evasion 101” or “Avoiding Capital Gains on Cryptocurrency,” many of which were posted in the past year and have hundreds of thousands of views.
Part of this has to do with how complicated tracking crypto gains and losses has become with the rise of decentralized finance, or DeFi, which includes more complex mechanisms like airdrops, staking, yield farming, and other speculative endeavors based on digital tokens and assets include both short-term and long-term capital gains.
Perhaps an explosion of internet content aimed at avoiding crypto taxes comes as no surprise. We have already seen individuals move to Puerto Rico to exploit loopholes that exempt them from paying taxes on crypto holdings provided they become residents of the island.
On the mainland, one way to take stock is to simply look at platforms like YouTube where crypto influencers offer tax advice. Take “Nichita Russu,” a pseudonymous 17-year-old who posts content and trades crypto under the supposed name of his mother. Russu’s contribution to the canon is a step-by-step guide on YouTube titled “Crypto Tax Evasion 101,” which includes a thumbnail with anti-Semitic imagery and the mandatory disclaimer “This is not financial advice.”
“Hey guys, today I’m going to talk about how I’m going to evade taxes from my crypto and how I’m not going to pay a single nickel to those motherfuckers in government,” Russu opens. “They can suck my cock and they can basically fuck themselves because I don’t pay these damn scumbags any damn money. ‘Oh let me take your money so I can bomb some brown kids in Syria. Yes, America, freedom. ‘ No, fuck you, basically.”
YouTube didn’t comment in time for publication, and neither did Russu.
In a key disclaimer, Russu admits he’s never done taxes himself (“I’m 17, I’ve never done taxes, but I know you must report your own taxes”). Its guide relies on trying to plausibly deny that you have custody of a wallet. Russu explains that would-be tax fraudsters should send money to another wallet and pretend it was the result of a hack.
“You sent your money to a different address, which means it can’t be taxed,” adds Russu. “This is another property, who owns it? and they will never be answered. This is crypto, mate.”
From there, Russu recommends that crypto tax scammers connect to Tor, switch to ETH, and use the Tornado.cash mixing service to anonymously withdraw the crypto and deposit it in a different wallet address. Russu explains that scammers can claim that they simply found this wallet (how they got the private keys might be harder to explain) that happens to contain ETH and decide to take out a loan against the ETH by they use a protocol like Liquidity, which allows you to collateralize crypto holdings.
When a commenter pointed out that a simple check would uncover this scheme, Russu simply replied that the wallet would be “hacked” again and he would then collateralize the crypto held in another token.
All of this overlooks the ability of firms dedicated to tracking cryptocurrency laundering through forensic analysis of the blockchain. A variety of services have sprung up over the years that specifically aim to track the kinds of activities that Russu believes have never been considered by corporations or the federal government before.
Other videos are a bit more cautious (and knowledgeable) than Russu’s and take a different approach, trying to minimize your tax bill rather than evading taxation directly using the language of avoidance. Still, these videos all have names like “How to Avoid Crypto Tax: Withdrawal” and “How to Avoid Crypto Tax – 4 Legal Examples (Beginner to Intermediate)”.
YouTuber Full Value Dan’s advice hinges on avoiding exchanges that are compliant with anti-money laundering (AML) protocols like Know Your Customer (KYC). Such processes require exchanges to both identify their customers and conduct due diligence by screening them or monitoring their transactions. Full Value Dan did not respond to Motherboard’s request for comment.
Mark J. Kohler – Chartered Accountant, Tax Attorney, Cryptominer and Podcaster – has released a video titled “Avoiding Cryptocurrency Capital Gains” that demonstrates tax strategies that rely on shell companies, trust companies and retirement accounts to avoid taxable events (sales, swaps, airdrops ) etc.) while maximizing your ability to acquire and trade crypto tax-free (or as close to tax-free as possible). Kohler did not respond to Motherboard’s request for comment.
In another video, a channel called WhiteBoard Crypto prefaces its guide by saying they “cover the legal ways but will discuss some illegal ways so you know what not to do.” Or at least that’s my intention.” To that end, they survey legal tax avoidance strategies, as well as some aimed at tax evasion altogether, labeling one particular method, which involves exploiting friends and a wasted tax loophole, as “illegal and probably immoral” before quickly moving on to others.
On TikTok, we find a similar pattern: some influencers offer advice on legal tax avoidance strategies, others offer advice on how to avoid fraud and accurately track taxes owed, and some wink and nudge while talking about avoiding tax evasion. “Here’s how to avoid taxes when making money from crypto. I’m just a random guy on the internet, you shouldn’t listen to me. This is not advice,” a TikTok opens. He lists some reasons why you should pay taxes before glancing sideways at the camera, suggests that many people don’t pay taxes on their crypto gains, and then shares some tips on how to avoid capital gains reporting. However, Russu is again the most egregious example, as a snippet of his YouTube tips on tax evasion garnered 73,000 views on TikTok before being removed after Motherboard took action.
“Our top priority is fostering a safe and positive experience so everyone on TikTok is free to be creative,” a TikTok spokesperson said in a statement to Motherboard. “We do not allow content that causes financial or personal harm. or promotes illegal activities such as tax evasion.”
That there are so many videos like this only reinforces the idea that many crypto traders and investors aren’t really interested in the potential of this technology, or even using it to catalyze a better future, but are interested in how to something like this makes money as possible to deduct from it and how they can keep as much of that profit as possible. This isn’t unique to crypto, but an entire genre of tax avoidance content isn’t looking good.
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