By Nate Raymond
(Reuters) – An early investor in bitcoin, nicknamed “Bitcoin Jesus”, has been arrested in Spain, accused by the United States of avoiding paying at least $48 million in taxes, it said Tuesday the US Department of Justice.
Roger Ver45, was charged with mail fraud and tax evasion in an indictment filed in Los Angeles federal court that was unsealed after his arrest in Spain over the weekend, the department said.
Last year, the U.S. Supreme Court rejected an unnamed law firm’s appeal of court rulings holding it in contempt of a grand jury subpoena because it failed to not disclosed documents relating to a client matching the description of Ver.
Bryan Skarlatos, Ver’s lawyer, said in a statement that he was “very disappointed and surprised” by Ver’s arrest while traveling in Spain.
“Mr. Ver relied on prominent tax professionals to help him report his Bitcoin and he always intended to fully comply with his U.S. tax obligations,” Skarlatos said. “We look forward to establishing his innocence in court, if necessary.”
Ver, who for a time served as chief executive of digital wallet developer Bitcoin.com, began acquiring bitcoin in 2011 and actively promoted the cryptocurrency, earning him the nickname “Bitcoin Jesus.”
In 2014, Ver renounced his U.S. citizenship after becoming a citizen of St. Kitts and Nevis, which prosecutors said had tax consequences for him.
Specifically, when a person renounces their citizenship, their property is considered to have been sold at fair market value the day before they renounced their citizenship in a “disguised sale.”
Under federal tax law, any gain from this “constructive sale” must be recognized in that tax year.
On the day he became a citizen of Saint Kitts and Nevis, Ver and two companies he owned, MemoryDealers.com and Agilestar.com, held approximately 131,000 bitcoins which, at the time, each traded for approximately $871, valuing them at over $114 million.
Prosecutors said Ver hired a law firm to help him prepare his expatriation-related tax returns and a valuation to value his businesses, but provided them with false or misleading information about the crypto share -currency that they actually owned.
The Justice Department said that as a result, the law firm prepared and filed tax returns undervaluing both companies and their bitcoins and reported none personally owned by Ver.
Ver then took possession of the 70,000 bitcoins the two companies owned and sold them for approximately $240 million in 2017, according to the indictment. But prosecutors said he failed to pay taxes due on distributions from those two U.S. companies.
The indictment alleged that in total, the Internal Revenue Service was deprived of $48 million in taxes between 2014 and 2017.
The Department of Justice announced its intention to seek the extradition of Ver.
(Reporting by Nate Raymond in Boston, editing by Alexia Garamfalvi and Josie Kao)
