Italy's Guardia di Finanza uncovered a tax evasion case in Foggia and Rome, where a suspect allegedly used Bitcoin Ordinals and BRC-20 tokens to build and conceal more than €1 million (about $1.1 million) in undeclared capital gains. Chainalysis reported that investigators traced the activity from a seized hardware wallet using blockchain analytics.
How BRC-20 Tokens Were Used to Move Funds
Bitcoin Ordinals attach data like text or images to individual satoshis, while BRC-20 tokens use text inscriptions to create, mint, and transfer tokens on Bitcoin without smart contracts. Chainalysis said the suspect created assets, listed them for sale, and moved profits back to a main Bitcoin wallet. Those assets sold for multiples of their original cost, with gains routed back in BTC, and the suspect reinvested proceeds into new inscriptions repeatedly, forming a cycle of minting, listing, selling, and moving funds.
Blockchain Records Persist; Tax Gaps Remain Wide
Chainalysis noted: “The technical novelty of crypto does not equal anonymity.” Exchange records and on-chain patterns allowed investigators to connect wallet activity to a real person. However, global tax compliance remains poor. A 2026 paper in the Review of Accounting Studies found IRS data captured only 32%–56% of estimated U.S. crypto owners. An NBER working paper on Norway showed that crypto tax noncompliance was broad even among investors using identity-sharing exchanges. The IRS projected a gross tax gap of $696 billion for tax year 2022, with underreporting accounting for $539 billion.
U.S. Lawmakers Debate Crypto Tax Rules
The Italian case comes as U.S. lawmakers wrangle over crypto tax policies. The PARITY Act would direct the Treasury to study small crypto payment tax relief and issue guidance, not an immediate exemption. Kraken filed 56 million crypto tax forms for 2025, mostly for transactions under $50, and wants Congress to raise reporting thresholds. Separately, 18 bipartisan House members asked the IRS to review 2023 staking reward guidance before 2026. The PARITY Act also suggests allowing taxpayers to defer some staking and mining tax liabilities.
Chainalysis concluded that crypto users may try new asset types to hide gains, but public blockchains leave permanent records. The Italian case once again proves that without mixers or privacy layers, block explorers can strip away the disguise.