The U.S. Department of Justice said earlier this month that it had reached a deferred prosecution agreement with Roger Ver, widely known in crypto circles as "Bitcoin Jesus." Under the deal, fraud and tax evasion charges against Ver will be dropped if he pays up to $49.9 million.
According to BlockBeats, Ver was among the earliest public advocates of Bitcoin and bought large amounts of BTC in 2011 for less than $3 million. In February 2014, after obtaining citizenship in Saint Kitts and Nevis, he gave up his U.S. citizenship the following month in what the report described as an effort to avoid a heavy tax burden.
At the time, Ver and his companies held at least 131,000 BTC, worth more than $70 million based on then-prevailing prices. Under U.S. tax law, certain expatriates must treat their worldwide assets as if they were sold the day before expatriation and pay capital gains tax on that basis. The report said Ver paid $1.03 million in tax, but failed to report Bitcoin he held personally and significantly undervalued company assets. Ten years later, the IRS determined that he had falsified filings to evade taxes, leading to a claim of up to $49.9 million in taxes, penalties, and interest.
The U.S. Department of Justice said earlier this month that it had reached a deferred prosecution agreement with Roger Ver, the early Bitcoin advocate known as "Bitcoin Jesus." Under the agreement, fraud and tax evasion charges against him will be dismissed if he pays up to $49.9 million.
BlockBeats reported on Oct. 18 that Ver bought large amounts of Bitcoin in 2011 at a cost of less than $3 million. He later gave up his U.S. citizenship in March 2014, one month after obtaining citizenship in the Caribbean nation of Saint Kitts and Nevis. The report said the move was intended to avoid a high U.S. tax burden.
Exit tax rules became the core issue
At the time he renounced his U.S. citizenship, Ver and his companies held at least 131,000 BTC. Based on Bitcoin's price at the time, those holdings were worth more than $70 million.
According to the report, Ver appears to have expected that changing citizenship would close out his U.S. tax exposure. Instead, U.S. exit tax rules applied. Under U.S. tax law, qualifying expatriates must treat their worldwide assets as if they had been sold on the day before expatriation and pay capital gains tax on that deemed sale.
IRS said assets were omitted or undervalued
Ver reported and paid $1.03 million in tax, according to the report. But he did not report Bitcoin he held personally and also significantly undervalued company assets.
Ten years later, the Internal Revenue Service determined that he had falsified filings to evade taxes. The report added that falsified tax evasion is not subject to a statute of limitations. That left Ver facing up to $49.9 million in back taxes, penalties, and interest, or about 48 times the amount he originally reported and paid.
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