On Monday, a woman from California was sentenced to 18 months in a federal prison after she did not disclose income of over $2.6 million, which was made from illegal activities, which just shows how crimes related to cryptocurrency can have legal repercussions well beyond the blockchain.
Iris Au, 37 years old, lived in Irvine and used to be the girlfriend of Adam Iza. Iza described himself as a “cryptocurrency businessman” and referred to himself as “The Godfather.” The US Department of Justice stated that Au helped Iza create a system through which he transferred funds from his illegal activities and then failed to report about millions of dollars transferred into her accounts. She pleaded guilty to the crime of filing a false tax return in March 2025.
The $2.6 million was unreported income, not hidden coins
The $2.6 million represents the amount of money Au moved to her personal bank accounts between 2020 and 2023 without including it on her tax returns. It was not the cryptocurrency that was concealed on-chain.
The cryptocurrency link arose with Iza. The prosecution alleged that Au used approximately $16 million of dirty money to buy cryptocurrency for Iza.
U.S. District Judge Percy Anderson also ordered Au to pay $1.48 million in restitution and forfeit luxury and high-performance cars, designer handbags, three “Godfather” sculptures, and other assets.
Shell companies and cash to sheriff’s deputies
Prosecutors said Au played a central role in moving Iza’s money. At his direction, she created shell companies and opened bank accounts in their names. About $1 million, mostly in cash, was then paid to active Los Angeles County Sheriff’s Department deputies Iza hired as private security.
According to prosecutors, the deputies had received court-approved search warrants and clandestine law enforcement data against all individuals associated with Iza’s financial and personal disputes. The remaining amount was used for purchasing real estate, vehicles, jewelry, clothing, and almost $10 million in leisure expenses of the couple. One of the former deputies was sentenced to 21 months in federal prison earlier this month.
Prosecutors wrote in a sentencing memorandum:
Au concealed entities and income from her tax preparer and filed returns reporting only a small fraction of what she had actually received… Those were affirmative acts designed to prevent the IRS from learning the true extent of her income.
Iza faces a second sentencing after 15 years in Connecticut
Iza, 26 years old, has been in federal custody since September 2024. He has pleaded guilty to conspiracy against rights, wire fraud, and tax evasion in Los Angeles in January 2025, and he will be sentenced on October 5.
He has already been given a 15-year prison term in Connecticut for assisting with planning a Bitcoin robbery and abduction that did not succeed in Danbury in August 2024. The case against Au was investigated by the IRS Criminal Investigation and the FBI.
Why the story lands as crypto tax nets tighten
The broader market significance is regulatory, rather than an immediate price catalyst. The IRS says digital-asset income is taxable, while international reporting frameworks are making cross-border crypto activity easier for authorities to scrutinize.
TRM Labs estimated illicit crypto flows reached a record $158 billion in 2025, up nearly 145% from 2024. Yet illicit activity fell from 1.3% to 1.2% of total attributed on-chain volume, meaning crime grew sharply in dollar terms while shrinking slightly as a share of the market.
Large tax-reporting gaps remain. Chainalysis estimated at least $457 billion in potentially taxable on-chain activity worldwide in 2025 and said CARF-covered events represented only about 14% of that activity. Cryptopolitan previously reported that CARF data collection began January 1, 2026 across 48 jurisdictions.
For exchanges and investors, the global effect is more likely to be tighter compliance than direct selling pressure. A 2026 Banque de France study found transparency-enhancing regulation tended to narrow Bitcoin price differences across countries, while more restrictive measures could widen them. Au’s case therefore matters less as a market shock than as another sign that tax authorities are getting better at connecting bank records, reporting obligations, and crypto-linked financial activity.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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