Key Takeaways
- Roger Ver failed to report all assets on a key tax form (Form 8854) after renouncing US citizenship.
- Leading crypto lawyer David Lesperance says Ver may have received bad advice or ignored good advice on legal and financial matters.
- He thinks Ver believed cryptocurrency anonymity shielded him from taxes, despite transactions being traceable.
Recently, CCN reported that American authorities arrested Roger Ver, former CEO of Bitcoin.com, on suspicion of mail fraud, tax evasion, and filing false tax returns. The arrest places him under the jurisdiction of the United States, a country whose citizenship he previously renounced. Ver, nicknamed “Bitcoin Jesus” on account of his work with BTC, could face as long as 30 years in prison if he is found guilty.
Meanwhile, top crypto lawyer David Lesperance says Ver could have had bad advice. He also said Ver may have believed crypto anonymity could have helped him not pay tazes
Roger Ver Faces Potential Tax Issues on Bitcoin Holdings
On April 30, the US Department of Justice announced Ver had been arrested in Spain. He now faces extradition proceedings. If he is charged and found guilty, he would face a prison sentence of anything from two months to 30 years.
CCN recently spoke with crypto and extradition legal expert David Lesperance, about the case.
Ver renounced his American citizenship in 2014 and acquired citizenship through investment in Saint Kitts and Nevis . Lesperance explained the criteria for determining if someone is a “covered expatriate” includes having more than $2 million in worldwide assets or meeting specific federal tax obligations over the previous five years. Ver met the asset threshold, which meant he had to pay some American taxes.
He explained:
“When you expatriate, you look at determining whether you’re something called a covered expatriate. If you are, you’re any one of three things. Number one is that you have more than $2 million in worldwide assets or you have a particular amount of federal tax paid in the previous five years.”
Specifically, Ver faced what’s known as a section 8877 exit tax , a tax rule that treats the expatriate’s assets as if they were sold for their fair market value on the day before the expatriation. This deemed disposition is crucial for assets like Bitcoin, where the market value can significantly fluctuate. Lesperance noted that there are opportunities to apply discounts to the deemed sale value in certain circumstances, such as for market makers or assets with lockups and liquidity issues.
Lesperance asserted:
“He’s a covered expatriate because he had more than $2 million in worldwide assets as of the day before he renounced. Therefore, he triggers something called a section 8877 exit tax. That’s a deemed disposition for capital gains purposes. So he would have acquired a bunch of Bitcoin at various cost basis, and he been deemed to sell them at whatever the market value was.
“There are opportunities to discount that with a block discount. For example, if you’re a market maker or if you’re not in crypto, but you got pre IPO shares and lack of liquidity and lockups and all those good things, so there would have been a discounting opportunity. Whatever the fair market was on the close of the day before he left, his acquisition costs, his cost basis would have been that.”
The core of Ver’s legal troubles stems from his alleged underreporting on form 8854 , suggesting that he may have evaded taxes. This underreporting could have serious implications. People like Roger Ver have to work through a…
Read More:Roger Ver Arrest May Have Followed Bad Advice, Top Crypto Lawyer Says