Early investors of Bitcoin have fascinating tales to tell. None are more intriguing than Roger Ver’s, whose early success and evangelism of crypto investing earned him the nickname ‘Bitcoin Jesus’ and a giant IRS investigation into tax fraud.
What lessons does his tale hold for other taxpayers?
Ver jumped into Bitcoin in 2011, when the cryptocurrency was trading at less than $1. The price of a Bitcoin was volatile from the beginning, varying from $.29 to $29.60 in 2011 alone. For all its ups and downs, however, the cryptocurrency’s base value has marched exponentially upward over time. The price of a Bitcoin closed out 2024 at around $99,000.
By 2013, Ver had decided to start the process of expatriating from the U.S. And that’s when the real trouble started. Currently, the IRS asserts that Ver failed to pay more than $48 million in taxes after selling approximately $240 million in digital tokens. He was arrested in Barcelona in 2024 while attending a crypto conference, spent a month in jail, and is awaiting a decision about extradition to the U.S.
You can learn more about this case at Bitcoinist and Investment News. From a tax perspective, we’d love for you to heed the following lessons:
- The IRS will prosecute tax cases even in areas in which its regulations and guidance are unclear. This is particularly evident in the cryptocurrency space, where tax laws are still evolving. A 2013 email from Ver to his lawyers states, “I want to make sure that my exit tax payments are as clean as possible, with no room to have trouble from the IRS in the future.” Yet, here they are.
- Renouncing U.S. citizenship can be fraught with tax complications. An exit tax applies to individuals with a net worth exceeding $2 million or an average annual net income tax for the five previous years ranging from $171,000 (in 2020) to about $190,000 (for 2023) and marked for inflation yearly. Unrealized gains and asset valuations are notoriously challenged in these cases, as it was here, with the hefty $240 million sale of crypto in 2017 (after he expatriated) at the center of the tax evasion claim.
- Know your basic taxpayer rights. Ver’s attorneys assert that IRS agents “violated his attorney-client privileges in December 2017 by conducting an unannounced interview with one of his tax attorneys,” Investment News reports. The IRS offers a fundamental Taxpayer Bill of Rights that should be invoked whenever an IRS overreach is suspected. Additionally, have your accounting team and, separately, your legal counsel explain your rights for your information to be kept confidential.
The lessons drawn from this high-profile case underscore the complexities of tax compliance in the rapidly evolving digital asset landscape, the potential consequences of underestimating one’s tax obligations, and so much more. Feel free to contact us with questions.
