Microsoft employee sentenced to 9 years in first U.S. Bitcoin case involving tax fraud

A Ukrainian national has been sentenced to nine years in prison in what the IRS is describing as the United States' "First Bitcoin case [with] a tax component."

A former Microsoft engineer has been sentenced to nine years for stealing more than $10 million in digital value from his past employer in the form of "Currency stored value" including gift cards.

Volodymyr Kvashuk, a 26-year-old Ukrainian citizen residing in Washington, used the accounts and identities of his fellow employees to steal and then sell the CSV - making it appear as though his co-workers were responsible for the fraud.

Kvashuk also used a Bitcoin mixing service to further obfuscate the paper trail and filed fraudulent tax returns.

"Stealing from your employer is bad enough, but stealing and making it appear that your colleagues are to blame widens the damage beyond dollars and cents."

Kvushuk was charged with 18 federal felonies including six counts of money laundering and two counts of filing false tax returns.

The Ukrainian used the stolen funds to purchase a $1.6 million lake-front home and $160,000 Tesla vehicle.

According to Internal Revenue Service special agent Ryan Korner, the sentencing is "The nation's first Bitcoin case that has a tax component to it."

"Simply put, today's sentencing proves you cannot steal money via the Internet and think that Bitcoin is going to hide your criminal behaviors."

Kvashuk worked at Microsoft from August 2016 until being fired in June 2018.