Silicon Valley’s ‘Bitcoin Jesus’ fights $48 million IRS tax evasion case from Spanish island – The Mercury News

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By David Voreacos and Olga Kharif | Bloomberg

To his followers, Roger Ver is known as Bitcoin Jesus, a charismatic advocate of the cryptocurrency that is once again captivating investors with record-breaking gains. But to the Internal Revenue Service, Ver symbolizes a new target in the digital age: a crypto holder suspected of failing to pay taxes after selling tokens.

US prosecutors charged Ver this year with evading more than $48 million in taxes for selling $240 million in tokens. It’s the most prominent case dealing solely with tax fraud and digital-asset sales, and marks a break from the tradition of prosecutors tacking tax charges onto crypto cases for crimes like money laundering, ransomware attacks and investor scams.

Ver, 45, is awaiting a Spanish judge’s decision on whether he must be extradited to America after his April arrest in Barcelona while attending a crypto conference. The US expatriate spent a month in jail before getting out on bail and moving to Mallorca, where he’s received a steady stream of visitors. An outspoken critic of the US government, he said he’s being persecuted by prosecutors.

“They don’t like me, and they don’t like my political views, and they just came at me every which way,” Ver told Bloomberg News in an exclusive interview in late October.

RELATED: 2 California men charged in $230 million cryptocurrency theft following FBI raid of Miami mansion

Ver said the Justice Department has ignored evidence that helps his defense and refutes a central premise by prosecutors – that he intended to cheat the IRS. Rather, he said, he relied on professionals who advised him when IRS policy on taxing crypto sales was unsettled.

“I instructed all my tax attorneys and preparers, ‘We need to do everything perfectly because I don’t want any problem with the IRS at all,”’ Ver said. “That was their instructions the whole time.”

A Justice Department representative declined to comment.

The seeds of Ver’s legal peril lay in his success as an early crypto investor — long before the latest Bitcoin rally fueled by Donald Trump’s US presidential win. They center on his representations to the IRS and the agency’s reconstruction of his holdings.

Ver grew up in Silicon Valley, founding a computer company called MemoryDealers at the precocious age of 19. He also engaged in tax protests and ran for California’s legislature at 21 as a libertarian.

In 2001, he pleaded guilty to dealing explosives without a license. (Ver says he simply sold firecrackers on eBay.) He served 10 months in prison, which hardened his attitude toward the US government. He left America in 2006, moving to Japan. He focused on building MemoryDealers and another firm, Agilestar, which sold optical transceivers.

Spreading the Gospel

When crypto began, he embraced its promise for transferring wealth without government interference. He started buying Bitcoin in 2011 for less than $1, touting it at barbecues, parties, and everywhere else. Intense and fast talking, he spread the vision of using crypto to buy a sandwich or even a car. When Bitcoin hit it big, Ver touted its potential from conference stages.

He co-founded Blockchain.com, a crypto company once valued at $14 billion, and was an early investor in payment processor BitPay and digital-asset firm Ripple. When the Bitcoin network underwent a software upgrade he opposed in 2017, Ver broke with the community, switching to a split-off called Bitcoin Cash. He said his current holdings include Bitcoin, Bitcoin Cash, Ether and Zeno.

Despite his notoriety, Ver decided in 2014 to renounce his US citizenship, later becoming a citizen of St. Kitts and Nevis. US citizens who expatriate and are worth more than $2 million must report their worldwide assets to the IRS, and pay an exit tax based on their asset sales.

As he planned to expatriate, prosecutors allege, Ver hid the number and value of Bitcoin he owned and controlled personally and through MemoryDealers and Agilestar, his California-based companies.

The IRS used blockchain analysis to determine that by early 2014, Ver and his companies owned about 131,000 Bitcoin trading between $782 and $960, according to the indictment — more than he reported in tax filings. He’s accused of tax evasion, wire fraud, and filing a false tax return.

Ver worked with a law firm and appraisers on the exit tax, but gave them false or misleading information about his Bitcoin holdings, and an exit tax return filed in 2016 failed to report the Bitcoin he owned personally and underreported the value of his companies, prosecutors charge.

The indictment also alleges Ver “fraudulently misrepresented and concealed” from the IRS the crypto that his companies sold in 2017 for about $240 million.

Ver disputes this characterization, but declined to discuss the indictment further or elaborate on his crypto holdings with Bloomberg.

A website, freerogernow.org, is linked to Ver’s personal website and encourages supporters to sign an open letter calling on the US government to end his “unjust prosecution.” It adds some details about his investigation, including claims that IRS agents interrogated his tax lawyer in 2018 without a warrant and that litigation ensued about communications with his lawyers.

In 2022, the US Supreme Court took up a case that didn’t name the parties but matched Ver’s circumstances. The court dropped that case in 2023 without issuing a ruling.

If he’s extradited, Ver’s case would be the first to go to trial on crypto-only tax charges. In February, a Texas man, Frank Ahlgren, was accused of underreporting capital gains from selling $3.7 million in Bitcoin. Ahlgren pleaded guilty in September.

Ver, who has more than 700,000 followers on X, spent years under IRS investigation as he traveled the world. In 2021, he posted a satirical video titled “Taxation is Theft.”

Ver was indicted Feb. 15 under court seal but didn’t learn about it until weeks later, when he was at the Privacy Guardians conference in Barcelona. His book, Hijacking Bitcoin: The Hidden History of BTC, had just gone on sale. A police officer approached him in the lobby of the W Hotel, asked him to confirm his identity, and said he had an Interpol arrest warrant for him.

“The bottom kind of fell out of my stomach and I was like, ‘Oh, my God, the US is going to do this to me again,”’ Ver said.

Back to Jail

With his arrest, Ver returned to prison, this time to a two-man cell in Spain. Some inmates incorrectly assumed he was American spy or undercover cop, he said.

“I didn’t tell anybody in there who I was because I didn’t want to get extorted or have any sort of problems with anybody,” Ver said.

Spain has been a close ally of the US in extradition cases. This year, Spain sent Douglas Edelman, a former defense contractor, to face US charges he evaded taxes on more than $350 million in income. He’s pleaded not guilty and denies the charges.

Ver said he’s spending his days in Mallorca talking to his lawyers on Zoom, practicing Brazilian jiujitsu and entertaining friends visiting from overseas. He’s attended Bitcoin meetups, where he said he was well received.

Ver appeared in an HBO documentary about the origins of Bitcoin. A sparring partner from jiujitsu said he’s seen him in the show.

“I said, ‘Please, if you don’t mind, don’t mention that to anybody else.’ He said, ‘Sure, no problem.’ But he had kind of a sly grin when he said that to me.”

–With assistance from Ava Benny-Morrison and Jorge Zuloaga.

More stories like this are available on bloomberg.com

Originally Published: November 14, 2024 at 7:17 AM PST

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