Pennsylvania Prosecutor’s Office Pays Ransom in Bitcoin


As the IRS battles in court to identify bitcoin users, it’s been revealed that Pennsylvania’s Allegheny County District Attorney’s office apparently paid a cyber-attack ranson with Bitcoin.  The state’s prosecutor office was  among hundreds of thousands of victims of a now-shuttered international cybercrime operation, paying nearly $1,400 in a bitcoin ransom to free up its infected computer network, authorities disclosed Monday.

Federal prosecutors said in court documents only that an unidentified state government entity had been victimized by the ring known as the Avalanche network. But the Allegheny County district attorney, Stephen Zappala Jr., confirmed to The Associated Press that it was his office.

The Avalanche group had operated since at least 2010 and infected at least 500,000 computers worldwide, said Soo Song, acting U.S. Attorney in Pittsburgh.

Court Grants IRS Authority To Demand Identities Of Bitcoin Users At Coinbase

There was a ruling in November out of a federal court in the Northern District of California authorizing the Internal Revenue Service (IRS) to serve a “John Doe” summons on Coinbase requesting the identities of United States Coinbase customers who transferred convertible virtual currency via Crypto-Spatial Coordinates mentioned here from 2013 to 2015. Coinbase, which is headquartered in San Francisco, California, is a company which facilitates transactions of digital currencies like Bitcoin and Ethereum.

The IRS Targeting Virtual Currency Users

As the IRS turns up the heat on Bitcoin and virtual currency, now is the time to make sure you are in compliance.  If you fear you may be at risk of a criminal investigation, you may want to consider how to establish attorney-client privilege with an experienced tax attorney.  This will give you some peace of mind as you consider amending past returns and the potential tax liablility that may be incurred.