Tax compliance is becoming increasingly important in the crypto market

The booming development of the crypto market is accompanied by increasingly prominent tax compliance risks. In April 2024, Roger Ver, known as the "Bitcoin Jesus," was arrested in Spain for allegedly evading $48 million in taxes. This incident has attracted widespread attention in the industry and highlights the growing importance of tax compliance in the encryption sector.

Recently, as the price of Bitcoin has surpassed the $100,000 mark, there has been new progress in the Roger Ver case. His legal team submitted a motion to the court on December 4, 2024, requesting the dismissal of the tax evasion charges against him. Currently, Roger Ver is still in Spain awaiting the extradition decision from the United States. This article will review the ins and outs of this case and provide compliance recommendations regarding related tax risks.

1. Review of the Roger Ver Case

1.1 Background of Roger Ver

Roger Ver, born in 1979 in Silicon Valley, USA, is a well-known libertarian and anarchist. During his university years, he founded Memory Dealers, a company primarily engaged in the resale of computer parts. With keen business insight, Ver earned his first million dollars at the age of 24.

In 2011, Ver began to venture into the Bitcoin space and announced that his company would accept Bitcoin payments, becoming the world's first enterprise to support Bitcoin transactions. Since then, Ver has continuously purchased and collected Bitcoin in large quantities through personal and corporate channels, and has held several important positions, including CEO of a well-known crypto market website and founder of a Bitcoin foundation. He actively promotes the application and value of Bitcoin, making significant contributions to its early popularization, thus gaining immense influence within the crypto asset circle and being hailed as the "Bitcoin Jesus."

1.2 The IRS's allegations

In 2014, Ver obtained citizenship from the Federation of Saint Kitts and Nevis and subsequently renounced his U.S. citizenship. According to U.S. tax law, individuals who renounce their citizenship are required to fully report capital gains on their global assets, including holdings of Bitcoin and fair market value. The IRS believes that Ver concealed and understated the value of his personal assets before renouncing his citizenship and then obtained and sold approximately 70,000 Bitcoins from a U.S. company he controlled after renouncing his citizenship, profiting nearly $240 million, thereby evading at least $48 million in taxes owed.

The accusations from the IRS mainly include two aspects:

1. Ver did not comply with the exit tax regulations. When renouncing his US citizenship, Ver underreported the actual amount of Bitcoin held by him and the companies he controls, concealing related transaction details and evading this portion of tax obligations.

2. Ver violated the tax obligations as a non-U.S. tax resident. Although Ver has renounced U.S. citizenship, due to his company still being based in the U.S., Ver transferred and sold Bitcoin held by the U.S. company under his name in 2017, obtaining substantial income without reporting it to the U.S. government, thereby evading the corresponding tax obligations.