Today in Crypto: Crypto Nomads Move Back to Big Cities; Court OKs IRS Tax Probe of Dealer SFOX

As the pandemic wanes, Bloomberg reported that crypto nomads are returning to big cities like New York and London.

Crypto workers have spent the last few years being able to move anywhere they wanted, particularly as living costs soared for big cities. However, pandemic travel restrictions and the crypto crash have made this lifestyle increasingly difficult to maintain.

Elsewhere, a court ruling will now let the IRS serve a “John Doe” summons on crypto prime dealer SFOX, letting the agency hunt for possible tax evaders using the company’s services.

CoinDesk noted the IRS has also done this for Kraken and Circle, and usually does so to try and assess whether customers are reporting their taxes correctly.

In other news, former Commodity Futures Trading Commission Commissioner Dawn Stump has joined Solidus Labs as an advisor, lending her expertise to the crypto risk monitoring firm.

Stump was the commissioner of the U.S. derivatives markets regulator until this past April, CoinDesk reported Tuesday (Aug. 16). At Solidus Labs, Stump will advise the firm on policy development and regulatory engagement strategy.

In more crypto news, Digital Currency Group, which owns CoinDesk, has registered Vice President of Public Policy Julie Stitzel to lobby on its behalf with the U.S. government, according to a disclosure filing.

The move could see DCG getting more involved with lobbying, per a CoinDesk report — especially as the 2022 U.S. midterm elections approach.

Meanwhile, the three biggest U.S. public bitcoin mining companies have lost over $1 billion in the second quarter as they took impairment charges after the fall of crypto prices.

Bloomberg wrote that Core Scientific, Marathon Digital and Riot Blockchain had net losses of $862 million, $192 million and $366 million, respectively, for the quarter.

Also, losses from crypto hacks rose 60% in the first seven months of 2022, hitting $1.9 billion — an increase from $1.2 billion at the same time last year.

Reuters wrote this was the result of a surge in funds taken from decentralized finance (DeFi) protocols, per Chainalysis data. Chainalysis said this likely won’t improve any time soon, as there have been several recent high-profile hacks, including the $190 million Nomad hack and numerous Solana hacks in early August.

Finally, U.S. Treasury Department attempts to shutter Tornado Cash’s crypto-mixing service could be unconstitutional, according to Tornado Cash CEO Jesse Powell.

Powell said people “have a right to financial privacy” and insinuated there could be a challenge in court over the matter, Bloomberg reported Tuesday.

It comes after the Aug. 8 decision from the Treasury Department to sanction Tornado Cash because the company was being used by criminals to launder crypto. Powell said it was a “knee jerk” reaction to other controversies in crypto over the past few months.

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