“Bitcoin Jesus” Charged with Tax Fraud

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“Bitcoin Jesus” Charged with Tax Fraud

On April 30, a federal grand jury indicted early bitcoin investor and promoter Roger Keith Ver – a.k.a. “Bitcoin Jesus” – on fraud and criminal tax charges. IRS Criminal Investigation Cybercrimes’ Unit is leading the investigation in what appears to be the largest case of cryptocurrency-related tax fraud ever charged.

Ver, a former California resident whose most recent residence was in Tokyo, Japan, was arrested last week in Spain on the pending charges. The US Department of Justice will seek Ver’s extradition to stand trial in the United States.

According to the eight-count indictment returned on February 15, and unsealed last week, Ver, an early adopter of cryptocurrency, first started acquiring bitcoin in 2011 from Mt. Gox, a now defunct first-of-its-kind (and subsequently hacked) cryptocurrency exchange. He acquired bitcoin on his own behalf and in the names of two companies he ran, MemoryDealers and Agilestar. He later acquired more bitcoin from Bitstamp in 2012 and even accepted bitcoin as part of his retail business at MemoryDealers. Ver acquired so much bitcoin that he donated 1,000 to charity in 2013 (then valued around $1,000,000). This activity is represented in the TRM graph below.

On February 4, 2014, Ver allegedly obtained citizenship in St. Kitts and Nevis and shortly thereafter renounced his U.S. citizenship in a process known as expatriation. As a result of his expatriation, Ver allegedly was required under U.S. law to file tax returns that reported capital gains from the constructive sale of his world-wide assets, including the bitcoin, and to report the fair market value of his assets. He was also allegedly required to pay a tax – referred to as an “exit tax” – on those capital gains. By February 4, 2014, Ver and his companies allegedly owned approximately 131,000 bitcoin that traded on several large exchanges for around $871 each. MemoryDealers and Agilestar allegedly held approximately 73,000 of those bitcoin.

Ver, according to the indictment, provided false or misleading information to a law firm and appraiser hired to file taxes on his behalf, concealing the true number of bitcoin he and his companies owned. As a result, the law firm allegedly prepared and filed false tax returns that substantially undervalued the two companies and their 73,000 bitcoins and did not report that Ver owned any bitcoin personally. 

Ver subsequently sold tens of thousands of his bitcoin and those belonging to the companies on cryptocurrency exchanges for approximately $240 million in cash. In total, according to the government, Ver is alleged to have caused a loss to the IRS of at least $48 million.

While we have seen a number of large cryptocurrency investigations and billions in seized and forfeited funds, this case is unique in that the charges are all related to Ver’s tax evasion. The case shows that IRS-Criminal Investigation, IRS, and tax authorities worldwide are focused on ensuring that they are capturing tax revenue associated with cryptocurrency transactions. In fact, in February 2024 On February 7, the US Department of Justice announced that a federal grand jury indicted a Texas man, in a first of its kind case, for filing false tax returns and structuring cash deposits to avoid currency transaction reporting requirements. The case, like this one, was unique because it did not include a larger fraud scheme.

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