![]() The Infrastructure Investment and Jobs Act (“IIJA”) also expanded the reporting requirements for “brokers” to report Form 1099-B filings for transfers of digital assets and Form 8300 for crypto payments over $10,000. Examples include crypto 401(k)s and social media accounts connecting to crypto wallets. There are ongoing changes within the crypto space which may further improve transparency. The state and federal jurisdictional rules can help practitioners navigate the division of assets or reimbursement claims. Once prepared, the reports can then be used in conjunction with the other assets and liabilities in the case to facilitate a property settlement, assess the costs / risks of transferring the crypto assets, and understand any recurring income (such as staking rewards or interest on crypto deposits). ![]() Often, forensic accountants will use the transaction data obtained to prepare balance sheets, income statements, and “statements of crypto flows.” These reports will help clients understand the flow of funds and remaining balance(s) in the wallets, accounts receiving the funds, who controlled the assets, and more. This process may also uncover potential tax liabilities from prior transactions and add to the complexity of the case (see further discussion below). That said, there are ways to mitigate the costs via indirect income approaches, detailed document production, additional interrogatories, scope / timeline limitations, etc. Regardless, the tracing of these transactions may be expensive and ultimately unnecessary if the funds cannot be seized at the end of the day. While the particulars of these investigations are beyond the scope of this article, the discovery process has improved through a combination of commercially available blockchain analytics tools, tax disclosures, improved data from centralized exchanges and DeFi protocols, as well as widespread acceptance. Financial Forensics: Finding Historical Cryptocurrency Dataįinding crypto data is just the beginning, and often involves a separate forensic engagement with qualified analysts to help identify transactions and remaining holdings.
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