Regulation
First Bitcoin Investor Roger Ver Has Been Charged With Tax Fraud
Roger Ver, an early cryptocurrency investor known as Bitcoin Jesus due to his fervent promotion of Bitcoin during his formative years, was recently arrested in Spain on the basis of an act of American accusation.
Ver faces very serious allegations
Some of Ver’s allegations include mail fraud, tax evasion and filing false tax returns, allegedly to avoid more than $48 million in U.S. taxes. The arrest is part of a broader effort by US authorities to crack down on questionable practices within the booming cryptocurrency sector, which has seen other high-profile figures face legal repercussions.
Among those recently affected by US repression is Zhao Changpeng, co-founder of Binance, the world’s largest cryptocurrency exchange, sentenced to four months in prison. Similarly, Sam Bankman-Fried, the former CEO of cryptocurrency exchange FTX, was sentenced to 25 years in prison. These cases highlight the growing scrutiny of ethical and legal standards in the crypto industry.
According to the indictment, Ver, who renounced his U.S. citizenship in 2014 to become a citizen of St. Kitts and Nevis, failed to report capital gains from his early Bitcoin investments which began in 2011. Despite his expatriation, U.S. tax laws required Ver to file a return. tax returns including earnings from specific assets like Bitcoin, as well as their fair market values. As of February 4, 2014, Ver and his companies owned approximately 131,000 Bitcoins.
Legal documents allege Ver provided misleading information
The misleading information was passed to a law firm responsible for preparing his tax returns. This misinformation led to significantly understated tax returns for two of his companies, which held only 73,000 Bitcoins and omitted any mention of Ver’s personal Bitcoin holdings. This manipulation of information became a central point of the accusations against him.
To further complicate Ver’s legal situation, in November 2017, he sold tens of thousands of Bitcoins for approximately $240 million. This major transaction was not disclosed to his accountant, causing the Internal Revenue Service (IRS) to lose at least $48 million in taxes, according to the indictment. The forgetting of such a large sum underlines the scale of the escape of which Ver is accused.
Announcement of the charges came from the Department of Justice’s Tax Division and U.S. Attorney Martin Estrada of the Central District of California. The IRS Criminal Investigation Cybercrimes Unit is handling the investigation, reflecting the technical complexity involved in prosecuting cryptocurrency crimes.
Ver’s influence in the world of cryptocurrencies goes beyond Bitcoin
He has been a significant investor in other major crypto platforms including Kraken and Blockchain.com. Initially a prominent supporter of Bitcoin, Ver’s relationship with the community deteriorated following disagreements over proposed changes to Bitcoin network operations. These disagreements were significant enough to prompt Ver to shift his support to Bitcoin Cash, a Bitcoin spin-off, in 2017 – a move he expanded on in a book published earlier this year.
Social media reactions to Roger Ver’s arrest have been decidedly mixed, reflecting a range of sentiments from the cryptocurrency community. Among the vocal critics was Dan Held, former head of growth at Kraken, who expressed strong disapproval of Ver’s actions. Held accused Ver of jeopardizing his professional career and damaging his personal relationships through targeted attacks and public denunciations.
He also criticized Ver for significantly misrepresenting Bitcoin’s potential, saying that Ver’s actions precipitated a deep division within the Bitcoin community, often referred to as a “civil war.” Held’s comments highlighted the controversial nature of the debate surrounding Ver’s influence on the cryptocurrency landscape.
As the legal process unfolds, the case against Roger Ver will likely set an important precedent for how U.S. authorities handle similar cases in the crypto industry, particularly those involving tax evasion and fraud.