Roger Ver was nicknamed «Bitcoin Jesus» because he was an early adopter of the cryptocurrency and became one of its first investors. He is accused of filing false tax returns, mail fraud and tax evasion.
A decade ago, Vere became a citizen of St. Kitts and Nevis, a state in the Caribbean that is known for its low taxes, and later renounced his U.S. citizenship. When he did so, he was required to file capital gains declarations from the sale of international assets (including bitcoin), as well as report the fair market value of assets. This also requires the payment on such capital gains.
The prosecutor’s office claims that by February 4, 2014, Ver and his companies owned approximately 131,000 BTC, purchased no later than 2011, with a price of $871. According to the tax code, when someone leaves the United States with «insured alien» status, all of their property is treated as if it had been sold right before the date of departure at fair market value («constructive sale»). The gain realized from such a constructive sale must be taken into account in the current tax year and is subject to tax («exit tax»). Ex-citizen must also confirm that they have fulfilled their tax obligations for the five years prior to becoming a citizen and provide information on their capital, income, assets and liabilities as of the date of departure.
The prosecutor’s office accuses Ver of providing false information to the hired law firm and appraiser, with an underestimated number of bitcoins. Because of this, the firm allegedly filed false tax returns, with a significantly lower value of both companies. The lawyers also failed to disclose that Ver personally owned bitcoins.
On October 14, 2015, Ver’s tax specialist sent him an email asking him to name the number of bitcoins he owned as of February 4, 2014. But instead of answering, Vere asked: «Hypothetically speaking, what would be the consequences if I had 200,000 [bitcoins] at the time of my refusal? To this, he was advised to get an estimate from a third party.
The indictment also states that by June 2017, two of Wehr’s companies had about 70,000 bitcoins in their possession. Wehr allegedly took possession of these assets and sold tens of thousands of them that year, for which he received about $240 million in cash.
Prosecutors say that although Ver was not a U.S. citizen at the time, he was still required to report to the IRS and pay taxes on certain income, such as dividends from U.S. corporations. Wehr allegedly concealed from the IRS that he received and sold bitcoins from MemoryDealers and Agilestar. In particular, he transferred tens of thousands of bitcoins to personal accounts and then sold them for US dollars.
He transferred approximately $240 million of them to his own bank accounts or those under his control in the Bahamas. Vera’s 2017 income tax return did not indicate any profit or tax paid related to the distribution of these bitcoins to him. It is believed that he caused $48 million in losses to the state.
Although the indictment was filed earlier, Vera was arrested this weekend in Spain on US criminal charges. The US authorities will seek Vera’s extradition to stand trial in the US.
Source: Forbes