A Senate Committee is investigating whether a prominent encryption investor violated the federal tax law to save hundreds of millions of dollars after moving to Puerto Rico, a popular offshore tax refuge, according to a letter examined by the New York Times.
Senator Ron Wyden, a Democrat of Oregon, sent the letter on January 9 to Dan Morehead, founder of Pantera Capital, one of the largest encryption investment companies.
The letter said that the Senate Finance Committee is investigating tax compliance by wealthy Americans who had moved to Puerto Rico to benefit from a special tax break for islanders who can reduce tax accounts to zero.
The survey focused on people who had implemented the tax break inappropriately to avoid paying taxes on the income they won outside Puerto Rico, according to the letter.
“In most cases, the majority of profit is actually a US source income, which may refer to US tax returns and is subject to US tax,” the letter said.
The letter requested detailed information from Mr Morehead about $ 850 million in investment profits made after moving to Puerto Rico in 2020, noting that he may have faced profits as free from US taxes.
Mr Morehead said in a statement that he moved to Puerto Rico in 2021. “I think I acted properly in relation to my taxes,” he said.
Mr Wyden was chairman of the Finance Committee until the Republicans took control of the Senate last month. During his term, the Commission explored several strategies that the wealthy Americans used to avoid paying taxes.
It is not clear what can happen from the research. According to Biden’s administration, federal regulators and democratic legislators destroyed the encryption industry and prominent technological personalities. President Trump and Republicans in Congress have embraced Crypto, promising less aggressive enforcement.
A spokesman for Mr Wyden said the investigation was “continuous” and denied further comments. A spokesman for the new chairman of the Finance Committee, Senator Michael D. Crapo of Idaho, did not respond to a request for comments.
For more than a decade, wealthy Americans, including many technology entrepreneurs, have flock to Puerto Rico to benefit from ACT 60, a tax break founded in 2012 by a different name. Any income of capital profits produced in the US territory is not subject to local or federal income tax.
In recent years, the Ministry of Justice, the Internal Revenue Service and legislators have explored the abuses of this system. The IRS said its criminal division has identified about 100 people who may have committed tax evasion.
A former Goldman Sachs merchant, Mr Morehead, founded Pantera in the early 2000s and transformed it into one of the largest investment companies that focused on encryption, supporting more than 100 encryption companies over the past 12 years. These include large American cryptographic companies such as Circle, Ripple and Coinbase, which exploits the largest market for digital coins in the United States.
After Mr Morehead moved to Puerto Rico, Pantera sold a “big position” and created capital profits “over $ 1 billion”, according to Mr Wyden’s letter. Mr Morehead’s share of profits amounted to more than $ 850 million, the letter said.
The letter asked Mr Morehead to share information about these transactions, including the names of his tax consultants. He also asked him to share a list of the assets he sold while a Puerto Rico resident, including cryptocurrency.
