CoinMarketCap News, Sept 1: Is Bitcoin an Ideal Tool for Evading Taxes?

CoinMarketCap News, Sept 1: Is Bitcoin an Ideal Tool for Evading Taxes?

Saylor hasn’t publicly addressed the AG's lawsuit yet, but we can imagine that his lawyers will have to come up with something better than "I lost my Bitcoin in a boating accident. Tax that."

CoinMarketCap News, Sept 1: Is Bitcoin an Ideal Tool for Evading Taxes?

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Editor's Note: Taxing Times for Michael Saylor

Molly Jane Zuckerman writes...

In January 2021, Bitcoin bull and former MicroStrategy CEO Michael Saylor said this in an interview about taxes:

"You can tell them [the government] to go f*** themselves [...] the classic Bitcoiner response is: Oh, my Bitcoin? I lost it in a boating accident. Ever heard that phrase? It's kind of a trope, but what it means is at the end of the day, if you push me too far, I lost it, it's gone, sorry, tax that!"

Well, DC Attorney General Karl Racine apparently does want to tax that.

In a Twitter thread yesterday (and also an official lawsuit, of course,) the AG tweeted that Michael Saylor is being sued for tax fraud: namely, the AG claims that Saylor was living in DC for 10 years… and never paid any DC income taxes. MicroStrategy is also getting sued for its role in hiding Saylor's actual place of residence.

In the remote world of crypto, it is often quite hard to tell where someone lives. Even if you're not strictly anonymous, you can hide behind an avatar of a cartoon NFT, you have Zoom backgrounds at your disposal — it's very common to hear awkward silence when you ask where someone lives on a work call. Much safer to just ask about the weather.
And there's not necessarily anything nefarious about that — Vitalik Buterin himself has fully embraced the digital nomad lifestyle, traveling on over 360 flights and 1.5 million km with just a 40-liter backpack, if you read his blog.

However, Michael Saylor isn't your typical digital nomad. He was CEO of a very large U.S. company for 33 years, has a house in the Hamptons, and had reportedly been living in Florida (not DC) despite him also owning a house in Georgetown plus two DC-based yachts.

The other thing about Saylor is that he owns a lot of Bitcoin personally: over 17,700 BTC, in fact. And the other thing about the blockchain is that it is a public ledger that law enforcement has often praised in the past as being their "best friend" because of how easy it is to trace transactions.

While the AG's case doesn't seem to rest on Bitcoin taxes, but rather will come down to where Saylor technically lives, Bitcoin is sure to be a part of it because so much of Saylor's wealth is tied up in the top crypto.

Saylor hasn't publicly addressed the AG's lawsuit yet, but we can imagine that his lawyers will have to come up with something better than "I lost my Bitcoin in a boating accident. Tax that."

Saylor sued for income tax evasion 🚨

Michael Saylor is being sued for tax fraud in Washington DC — amid allegations he's lived there for a decade but has never paid income tax. The Attorney General claims the entrepreneur is a billionaire — and illegally avoided more than $25 million in owed payments by pretending he lived in Florida. Saylor could face substantial penalties if he loses the lawsuit as courts have the ability to impose "treble damages" — three times the amount of the taxes evaded. It's alleged that MicroStrategy's executive chairman didn't file a single income tax return between 2005 and 2021 — and bragged to friends about what he was doing. Officials claim they could end up recovering more than $100 million if their case is successful.

What the court filings tell us 👀

Concerns about Saylor's tax affairs were raised by whistleblowers. For tax purposes, a resident of DC is defined as someone who is based there for at least 183 days a year. Their calculations suggest he was physically present in Washington for 251 days in 2019 — and spent just 28 days in Florida. There seems to be plenty of evidence to link him to DC too, as he often tagged his location on social media and threw lavish parties in the city's top hotels. Saylor's preference for flying in a private jet rather than commercially also means official flight records show "exactly when he left the District and when he returned." It's claimed he found DC "irresistible" because of its proximity to "power, affluence and women."

Roche steps back from class actions 😱

Kyle Roche has withdrawn from a number of class action lawsuits against major crypto companies — days after secretly recorded videos of him were published. The lawyer, who is a founding partner at Roche Freedman, was caught on camera describing juries as "10 idiots" — and boasting that he "sues half the companies in the industry." Crypto Leaks alleged his law firm had formed an "extraordinary secret pact" with Ava Labs to attack rivals and harm the crypto industry. Roche has withdrawn from cases that have been brought against Tether, Bitfinex and the Tron Foundation — as well as the company that runs BitMEX. Court filings say that the lawyer "is no longer involved" in Roche Freedman's class action practice.

OpenSea backs The Merge 🔥

OpenSea has announced it's throwing its support behind The Merge — and will only support NFTs based on Ethereum's new Proof-of-Stake blockchain. It comes as a small number of miners threaten to fork the network and create an alternative form of ETH based on a Proof-of-Work blockchain. In a statement, the world's biggest NFT marketplace says forked non-fungible tokens "won't be supported or reflected." And acknowledging The Merge is a significant upgrade that could cause disruption, OpenSea says it has been preparing for a smooth transition, adding: "While we don't anticipate major issues, we also acknowledge this is a first! So we’re committed to monitoring, managing, and communicating throughout."
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