Italian Investigators Expose €1M Tax Fraud Tied to Bitcoin Ordinals and BRC-20 Tokens

Highlights:

• Italian investigators traced a Bitcoin Ordinals tax fraud scheme worth over €1 million.
• Chainalysis said a seized Ledger wallet helped connect many Bitcoin addresses together.
• Exchange records helped authorities link complex Bitcoin activity to a real-world suspect.

Italian investigators uncovered a multi-year Bitcoin Ordinals tax fraud scheme that generated more than €1 million in undeclared capital gains, according to a Wednesday report by Chainalysis. The case involved Italy’s Guardia di Finanza and showed how blockchain analysis helped authorities trace complex Bitcoin movements back to a real-world suspect.

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According to Chainalysis, investigators from the Economic and Financial Police Unit of Foggia and the Special Unit for Privacy Protection and Technological Fraud of Rome first looked into the suspect for unreported income. At the start, the case looked like a normal tax investigation. However, it soon became more complex when investigators found activity linked to Bitcoin Ordinals and BRC-20 tokens.

Chainalysis said the suspect was allegedly using these newer Bitcoin-based assets to create and sell digital items while also unlawfully receiving public subsidies. The operation eventually showed more than €1 million in undeclared gains.

🔥TAX EVADERS FOUND HIDING $1.1 MILLION ON BITCOIN

Bitcoin Ordinals and BRC-20 tokens are now being used by tax evaders to hide their wealth, per Chainalysis.

One case found a suspect in Italy allegedly created BRC-20 tokens, sold them for profit, then moved the money back into… pic.twitter.com/y5Pa2Ph4mO

— Coin Bureau (@coinbureau) May 21, 2026

Investigators Started with a Seized Hardware Wallet

The investigation began with a Ledger hardware wallet seized during a home search. A hardware wallet does not directly store crypto funds. Instead, it stores private keys that allow a user to control crypto on the blockchain.

Ledger wallets can create a new receiving address for each transaction. For a normal viewer, this can make the activity look scattered across many different Bitcoin addresses. However, Chainalysis said investigators used its Reactor tool to connect those addresses and map the wider wallet network.

This helped authorities see that several addresses were likely controlled by the same person. From there, investigators started building a clearer picture of how the suspected tax fraud scheme worked.

How the Bitcoin Ordinals Scheme Worked

Chainalysis said investigators found a repeated cycle. The suspect allegedly moved satoshis from his main wallet group to an outside inscription service. After that, he created digital assets and listed them on Ordinals marketplaces.

Once those assets were sold, the profits moved back to the suspect’s main Bitcoin wallet. The suspect then used the money again to create more inscriptions. Chainalysis said this cycle helped generate more than €1 million in undeclared capital gains.

Bitcoin Ordinals allow users to attach data, such as images, text, or code, to individual satoshis. A satoshi is the smallest unit of Bitcoin. BRC-20 tokens also use inscriptions on Bitcoin to create and transfer tokens without traditional smart contracts.

Exchange Records Helped Link Wallets to a Person

Blockchain addresses do not directly show a person’s real name. They are pseudonymous, which means the activity is public, but the identity behind the wallet is not always clear.

However, Chainalysis said regulated crypto exchanges played an important role in the case. Centralized exchanges collect customer information through Know Your Customer (KYC) rules. When exchanges responded to judicial disclosure orders, investigators were able to compare customer records with the wallet activity.

That helped authorities connect the on-chain Bitcoin activity with a real-world identity. Chainalysis said the case shows that newer crypto asset types are not beyond the reach of investigators.

The case also sends a wider message to tax authorities and crypto users. Bitcoin transactions may look complex, especially when wallets use many addresses. Still, blockchain records remain public and permanent. With the right tools and exchange cooperation, investigators can follow the movement of funds across wallets, marketplaces, and trading platforms.

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