Roger Ver, an early and influential investor in Bitcoin often called “Bitcoin Jesus,” has reached a deferred prosecution agreement with the U.S. Department of Justice. According to court filings, Ver will pay nearly $50 million to resolve federal tax evasion charges stemming from his cryptocurrency holdings.
The agreement requires Ver to pay $49.9 million, which covers his original tax liability, unpaid interest, and a significant civil penalty. In exchange, federal prosecutors will not pursue a criminal indictment against him for tax evasion.
Key Takeaways
- Roger Ver entered a deferred prosecution agreement with the U.S. Department of Justice to dismiss tax evasion charges.
- He will pay a total of $49.9 million, which includes his original tax bill, interest, and penalties.
- The charges are linked to Ver's failure to pay an "exit tax" on his substantial Bitcoin holdings after he renounced his U.S. citizenship in 2014.
- At the time, Ver controlled over 130,000 Bitcoins and owed approximately $17 million in capital gains tax.
Details of the Tax Evasion Case
The legal dispute centers on events from 2014, a pivotal year for Roger Ver. After becoming a citizen of St. Kitts and Nevis, he officially renounced his U.S. citizenship. Under U.S. tax law, individuals who renounce their citizenship are typically required to pay a one-time "exit tax" on the capital gains of their worldwide assets, as if they had sold everything on the day before expatriation.
According to the indictment, Ver began investing in Bitcoin as early as 2011. By March 2014, his personal holdings exceeded 130,664 Bitcoins. At that time, he was one of the most prominent advocates for the digital currency, earning the nickname "Bitcoin Jesus" for his practice of giving away Bitcoin to promote its adoption.
What is an Exit Tax?
The U.S. imposes an expatriation tax, or "exit tax," on certain individuals who renounce their citizenship or long-term residency. This tax is calculated on the unrealized capital gains of an individual's assets, including stocks, real estate, and digital currencies like Bitcoin. The law is designed to prevent wealthy citizens from avoiding U.S. taxes by simply moving abroad and giving up their citizenship.
Prosecutors stated that Ver failed to report and pay the required capital gains tax on his vast cryptocurrency portfolio. In the deferred prosecution agreement, Ver admitted to this failure. The original tax liability on his Bitcoin holdings was calculated to be nearly $17 million.
The Settlement Agreement
The settlement figure of $49.9 million is significantly larger than the initial unpaid tax bill. The total amount breaks down into three main components:
- The original tax liability of approximately $17 million.
- Accumulated interest on the unpaid amount over several years.
- A substantial civil penalty for the tax non-compliance.
This structure is common in tax-related settlements, where penalties and interest often exceed the original amount owed. The agreement allows both Ver and the government to avoid a lengthy and costly trial.
"This resolution sends a clear message: Whether you deal in dollars or digital assets, you must file accurate tax returns and pay what you owe," said Associate Deputy Attorney General Ketan Bhirud in a statement regarding the case.
The statement underscores the government's increasing focus on ensuring tax compliance within the digital asset space, which has historically presented challenges for regulators. Neither legal representatives for Ver nor the DOJ provided further immediate comment beyond the official court filings and statements.
Roger Ver's Influence on Crypto
Roger Ver was one of the first and most vocal proponents of Bitcoin. He invested in numerous early crypto startups, including Ripple, Blockchain.info, BitPay, and Kraken. His evangelism was critical in raising awareness and driving early adoption of cryptocurrency. He later became a prominent supporter of Bitcoin Cash (BCH), a cryptocurrency that split from Bitcoin in 2017.
Broader Context of Crypto Enforcement
The resolution of Roger Ver's case occurs amid a shifting landscape of U.S. government enforcement and policy toward the cryptocurrency industry. Several other high-profile figures in the crypto world have also faced legal challenges from U.S. authorities, leading to varied outcomes.
High-Profile Crypto Cases
The settlement with Ver is the latest in a series of major legal actions involving crypto pioneers. Observers are watching these cases closely to understand the direction of U.S. regulatory policy.
One notable recent event was the presidential pardon of Ross Ulbricht, the founder of the online marketplace Silk Road. Ulbricht, who was serving a life sentence, created a platform where Bitcoin was the primary method of payment for a wide range of goods, significantly boosting the cryptocurrency's early use and notoriety.
In another development, the Department of Justice's dedicated crypto unit, the National Cryptocurrency Enforcement Team (NCET), was disbanded in April. The unit was formed to tackle complex investigations into criminal uses of digital assets. Its dissolution has been interpreted by some as a potential shift in enforcement strategy.
Meanwhile, Changpeng Zhao, the founder of Binance, the world's largest crypto exchange, is reportedly seeking a pardon. Zhao pleaded guilty in 2023 to failing to maintain an adequate anti-money-laundering program at his company and served a four-month prison sentence. A pardon would clear his U.S. criminal record.
These events, taken together, illustrate the complex and evolving relationship between the cryptocurrency industry and U.S. regulatory and law enforcement agencies. While cases like Ver's demonstrate a continued focus on tax compliance, other actions suggest a fluid policy environment for digital assets.
