By Nate Raymond
(Reuters) – An early investor in bitcoins dubbed the “Bitcoin Jesus” has been arrested in Spain on U.S. charges that he evaded paying at least $48 million in taxes, the U.S. Department of Justice said on Tuesday.
Roger Ver, 45, was charged with mail fraud and tax evasion in an indictment filed in federal court in Los Angeles that was unsealed following his arrest in Spain during the weekend, the department said.
The U.S. Supreme Court last year dismissed an unnamed law firm’s appeal over court orders holding it in contempt of a grand jury subpoena because it had not released records related to a client matching Ver’s description.
Bryan Skarlatos, a lawyer for Ver, said in a statement he was “very disappointed and surprised” by Ver’s arrest while traveling in Spain.
“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,” Skarlatos said. “We look forward to establishing his innocence in court, if necessary.”
Ver, who for a time served as the chief executive of the digital wallet developer Bitcoin.com, began acquiring bitcoins in 2011 and actively promoted the cryptocurrency, earning him the name “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 someone gives up their citizenship, their property is treated as having been sold for its fair market value the day before they renounced their citizenship in a “constructive sale.”
Under federal tax law, any gain arising from that “constructive sale” must be accounted for in that tax year.
The day he became a St. Kitts and Nevis citizen, Ver and two companies he owned, MemoryDealers.com and Agilestar.com, held about 131,000 bitcoins that at the time each traded for about $871, valuing them at more than $114 million.
Prosecutors said Ver hired a law firm to help him prepare his expatriation-related tax returns and an appraisal to value his companies, but provided them false or misleading information about how much of the cryptocurrency they in fact owned.
The Justice Department said that as a result, the law firm prepared and filed tax returns that undervalued the two companies and their bitcoins and did not report any owned personally by Ver.
Ver later took possession of the 70,000 bitcoins the two companies owned and sold them for about $240 million in 2017, the indictment said. But prosecutors said he failed to pay taxes he owed 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 from 2014 to 2017.
The Justice Department has said it plans to seek Ver’s extradition.
(Reporting by Nate Raymond in Boston, Editing by Alexia Garamfalvi and Josie Kao)