Bitcoin
DOJ accuses ‘Bitcoin Jesus’ of $48 million tax fraud, seeks extradition
O indictmentfiled in California federal court, claims Ver carried out the fraud scheme by failing to report a portion of the 131,000 bitcoins he owned in 2014, when he renounced his U.S. citizenship after becoming a citizen of the Caribbean nation of St. Kitts and Nevis. .
At the time, each bitcoin was worth about $871. It was trading Wednesday morning at $57,416, which would make Ver’s 131,000 bitcoins worth more than $7.5 billion.
Becoming an expatriate in the US requires the individual to pay a special tax to the IRS. The DOJ alleges that in preparing these tax returns, Ver underrepresented his bitcoin holdings and evaded taxes on them.
The indictment further alleges that even after his expatriation from the US, Ver continued to underreport his bitcoin ownership, on which he was still required to pay US taxes.
Ver was arrested in Spain over the weekend. The United States is asking for his extradition to stand trial on eight charges related to tax evasion, mail fraud and filing false tax returns.
“At this time, I can say that we are very disappointed and surprised that Mr. Ver was arrested while traveling in Spain. This case should never have been brought,” Bryan Skarlatos, Ver’s lawyer, told CNBC in a statement. “Mr. Ver relied on leading tax professionals to help him report his Bitcoin and he always intended to fully comply with his U.S. tax obligations. We look forward to establishing his innocence in court if necessary.”
If convicted, Ver’s criminal charges could see him returned to federal prison, where he spent 10 months in 2002 after pleading guilty selling explosives called “Pest Control Report 2000” on eBay.
As bitcoin has boomed and failed over the past decade, the government has started paying more attention to potential financial crimes associated with the digital currency. The IRS has been working to become more sophisticated in tracking bitcoin investors as the currency becomes more popular.
According to the indictment, the IRS used a strategy called “cluster analysis” to track the blockchain and identify Ver’s bitcoin transactions.
Ver made his first million from bitcoin in 2011, the same year he began trading the digital currency, according to a CNBC 2013 Profile.
As he invested in bitcoin and promoted the digital currency, some members of the community came to know him as a Christ-like figure.
He told CNBC in 2013 that Peter Vessenes, founder of the Bitcoin Foundation, gave him the nickname “Bitcoin Jesus” while watching him explain the digital currency to some high school students.
“The kids were enchanted by bitcoin and listened to my every word,” Ver told CNBC.
According to Ver, Vessenes commented: “It’s like you’re a Bitcoin Jesus and you have all his disciples around you.”