“He isn’t the crypto messiah, he’s a very naughty boy” IRS 2024

Bitcoin Jesus – Introduction

If you’ve been following the buzz around Roger Ver, nicknamed “Bitcoin Jesus,” you’ll know he’s been in the spotlight for all the wrong reasons.

Earlier this year, I wrote about Ver’s troubles with US prosecutors who accused him of dodging a hefty $48 million tax bill after selling $240 million worth of crypto.

However, and a  fact unlikely to raise an eyebrow of anyone familiar with Ver, he has  recently gone on the offensive.

What’s it all about?

Ver has been accused of engaging in mail fraud, tax evasion, and filing false returns to evade paying approximately $48 million in taxes to the US government.

He was arrested in Spain just before the summer and faced potential extradition.

The crux of the case lies in Ver’s decision to renounce his US citizenship in 2014 and his alleged failure to file a proper “exit tax” return.

But what happened… or didn’t happen?

A quick warning that I’m not a US tax expert by any means.

However, if one renounces your US citizenship, like Ver reportedly did in 2014, then there is an ‘exit tax’

This is formally known as the “Expatriation Tax” and was introduced to prevent individuals from renouncing citizenship or long term residency primarily for tax avoidance purposes.

The exit tax is calculated based on the net unrealised gains on certain assets owned by the individual. This gain is deemed to be realized on the day before expatriation.

As you might guess, the IRS avers that Ver’s unrealised gains on Bitcoin should have suffered the tax.

The indictment states that the IRS is short to the tune of the $48m of capital gains mentioned.

Post arrest developments

Since his arrest in Spain in April, Ver has been fighting extradition to the US to face trial.

In his first court filing since his arrest, Ver’s lawyers appeared in Los Angeles federal court this week to argue that the US exit tax for expatriates with assets exceeding $2 million is both unconstitutional and unreasonably vague.

They claimed the tax violates fundamental rights and that there are “innumerable less restrictive ways” for the government to raise revenue.

But that wasn’t all.

Ver’s defense team also accused prosecutors of misconduct, alleging they improperly questioned one of his lawyers and disregarded evidence supporting Ver’s case.

According to his lawyers, these documents demonstrate Ver had no intention of flouting US tax laws.

But he US government isn’t backing off.

Prosecutors maintain that Ver deliberately concealed his Bitcoin holdings on his exit tax return, causing the IRS to lose at least $48 million.

They allege that Ver under reported both his personal Bitcoin stash and the holdings of two California-based companies he controlled, MemoryDealers and Agilestar.

According to the indictment, these companies held approximately 70,000 Bitcoin in mid-2017. Later that year, Ver allegedly sold tens of thousands of these coins, raking in $240 million.

Prosecutors also claim Ver misled appraisers and tax advisors about his cryptoassets, which led to a significant undervaluation of his assets on his 2017 exit tax return.

This, they argue, was a calculated move to evade tax liabilities.

Conclusion

The stakes couldn’t be higher.

If convicted, Ver faces severe penalties.

Each mail fraud charge carries a maximum sentence of 20 years, while each tax evasion charge could result in up to five years.

Additionally, each count of filing a false tax return could add three years to his sentence.

Perhaps Bitcoin Jesus demonstrates that an Eleventh commandment should be chiseled onto the blockchain – “thou shalt pay thine crypto taxes”

 

If you have any queries about this article, or crypto tax matters in general, then please get in touch.