Improvements Are Needed to Accurately Track and Safeguard Seized Digital Assets

Why did we do this audit?

In December 2023, IRS Criminal Investigation (IRS-CI) reported having seized digital assets totaling approximately $8 billion associated with open criminal investigations. A digital asset is any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology. Digital assets are stored electronically and can be bought, sold, owned, transferred, or traded.

We evaluated the processes used by IRS-CI for the safeguarding and disposition of digital assets seized during investigations.

What did we find?

IRS-CI did not always follow established guidelines when seizing and safeguarding digital assets. Internal guidelines require that every seized digital asset be captured in a memorandum to ensure its tracking and accountability while in the IRS’s control. However, seizure memorandums were not completed for all seized digital assets. Also, important information was not always included in completed seizure memorandums. For example, some memorandums did not include the seizure amount prior to transfer, the public addresses of the subject wallets, or the date the memorandum was completed.

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