Suspect Arrested for Allegedly Hiding Tens of Millions in Crypto Profits

Authorities in Israel have arrested an individual suspected of tax evasion and money laundering related to digital currency trading totaling tens of millions of dollars. The suspect allegedly traded cryptocurrencies on various exchanges without reporting the activity or income to the Israel Tax Authority, aiming to evade taxes. Investigations revealed suspicions that the individual also held undeclared foreign bank accounts and used another person's bank account to conceal their operations and funds. During searches, significant amounts of foreign currency and a luxury vehicle, reportedly registered under another person's name to hide the suspect's assets, were seized.

The suspect appeared before the Haifa Magistrate's Court, which extended their detention until Sunday, October 11. This case highlights the ongoing efforts by the Israel Tax Authority to track down and tax profits from the booming cryptocurrency market, which has a global value of approximately $3 trillion and sees daily trading volumes of around $74 billion. Bitcoin remains the leading cryptocurrency, trading around $85,000-$86,000.

In 2018, the Tax Authority classified digital currency as a "asset" for tax purposes, requiring investors to pay a 25% capital gains tax on profits if their activity does not constitute a business. If it is considered a business, individuals face either corporate tax or marginal tax rates. Despite these regulations, many Israelis reportedly do not declare their crypto gains, leading to billions of shekels in lost tax revenue annually. The Tax Authority has been implementing enforcement measures, collaborating with foreign authorities, and simplifying tax payment procedures to address this issue. A voluntary disclosure program aimed at crypto traders received only 203 applications, reporting approximately 482.5 million shekels in assets and an estimated tax of only 51 million shekels.