Hi, this is Charles Hoskinson broadcasting live from warm, sunny Colorado. Today is April 30th, 2024. I'm making a video that I really wish I didn't have to make. I was sitting here reading the Oror Leos paper—it's a pretty cool paper, got it right here—and I was having a hell of a time going through this magical piece of work that's six years in the making. Then, suddenly, lo and behold, a friend of mine just got arrested.
I figure I'd make this video because I like Roger. An early Bitcoin investor, he has been charged with tax fraud. The man known as "Bitcoin Jesus" evaded nearly $50 million in taxes. An indictment was unsealed yesterday charging Roger Ver, an early investor in Bitcoin, with mail fraud, tax evasion, and filing false tax returns. Ver was arrested this weekend in Spain based on U.S. criminal charges. The United States will seek Ver's extradition to stand trial in the U.S., according to the indictment.
Ver, formerly of Santa Clara, California, owned memorydealers.com and agilestar.com, two companies that sold computer and networking equipment. Starting in 2011, Ver allegedly began acquiring Bitcoins for himself and his companies. He also allegedly promoted Bitcoin, even obtaining the moniker "Bitcoin Jesus." I'm not exactly sure why they're using the term "allegedly" here; we all knew Roger back in the day, and yes, he absolutely did acquire Memory Dealers and Agile Star, which actually sold computers for Bitcoin. He was one of the first merchants to accept it, which is why he got so rich.
On February 4th, 2014, Ver allegedly obtained citizenship in St. Kitts and Nevis. Again, that's not allegedly; he is a citizen there. Shortly thereafter, he renounced his U.S. citizenship in a process known as expatriation. As a result of his expatriation, Ver was allegedly required under U.S. law to file tax returns that reported capital gains from the constructive sale of his real-world assets, including the Bitcoins, and to report the fair market value of his assets. We call that an exit tax. He was also allegedly required to pay a tax referred to as an exit tax on those capital gains.
By February 2014, Ver and his companies allegedly owned approximately 131,000 Bitcoins, which traded on several large exchanges for about $871 each. Today, if you had 131,000 Bitcoins, that's about $8.7 billion worth of Bitcoin. Memory Dealers and Agile Star allegedly held approximately 73,000 of those Bitcoins. I believe these are U.S. companies, and if they hold it, that's regardless of whether you rescind your citizenship under U.S. jurisdiction.
Ver allegedly hired a law firm to assist him with his expatriation and to prepare his expatriate-related tax returns. He also allegedly hired an appraiser to value his two companies. Ver allegedly provided or caused to be provided false or misleading information to the law firm and the appraiser, concealing the true number of Bitcoins he and his companies owned. As a result, the law firm allegedly prepared and filed false tax returns that undervalued the two companies and their 73,000 Bitcoins, failing to report that Ver owned any Bitcoins personally.
The indictment further alleges that by June of 2017, Ver's two companies continued to own approximately 70,000 Bitcoins. Around that time, Ver allegedly took possession of those Bitcoins and, in November of 2017, sold tens of thousands of them on cryptocurrency exchanges for approximately $250 million in cash. I remember 2017; it was a crazy time. McAfee was at the conferences, and Bitcoin had just hit $20,000 for the first time ever. I don't remember when the Bitcoin Cash fork happened, but it feels like it was around that time frame, so that would make sense why he divested—because he was selling the Bitcoin side and keeping the cash side.
Even though Ver was not a U.S. citizen, he was still legally required to report to the IRS and pay tax on certain distributions, such as dividends from Memory Dealers and Agile Star, which were U.S. corporations. These were allegedly concealed from his accountant, as he had received and sold Memory Dealers' and Agile Star's Bitcoins that year. As a result, Ver's 2017 individual tax return did not report any gain or pay any tax related to the distribution of Memory Dealers' and Agile Star's Bitcoins to him. In total, Ver is alleged to have caused a loss to the IRS of at least $48 million.
I met him many times throughout the years and ran into him at different conferences, usually abroad. The last time I saw him in the United States was actually at the Aspen Institute during a conference in 2017. We'd see him in Japan and other places. He’s a super nice guy, a black belt in Brazilian jiu-jitsu, and very principled. He expatriated not because of money, but because he really got shafted by the United States. He sold fireworks, and there was a sting operation; he got caught and was charged with a felony. He did some prison time, and during his time in prison, he taught himself Japanese. When he got out, he moved to Japan and has been floating around the world as a big Bitcoin guy.
For a long time, he was "the Bitcoin guy." Roger would go to barber shops and they’d cut his hair, saying, "I have to pay in Bitcoin." They’d be like, "What the hell is Bitcoin?" He’d say, "I gotta pay in it, sorry, you gotta take it." He'd go to restaurants and do the same thing, coffee shops too. It was pretty annoying, you know, haggling and arguing. But had they accepted it, they would have done pretty well because back then Bitcoin wasn’t worth a lot. To be honest, Bitcoin wouldn’t be where it’s at today without people like Roger Ver or Erik Voorhees.
It’s the old axiom: death and taxes are the two inevitable things. No matter if you rescind your citizenship or not, if you have U.S. substance, you gotta pay taxes. It’s deeply unpleasant. I’ve paid more taxes than most people will pay in ten lifetimes, and I feel the pain. It seems like in this case, there may have been some accounting snafus. Typically, the IRS has you dead to rights, and the CI division is pretty vicious, especially for high-net-worth individuals. I suspect this may be connected to the look-through that banks have, because that was one of the agreements they had.
I don’t know what exchanges he liquidated on; there are plenty of exchanges he had access to, and many of them have had to turn over a great degree of trading information as a direct result of investigations that have occurred from the SEC. Sometimes, when they find something, they share it with the IRS. It’s just a damn shame because, regardless of where you come out on the big block side of things, Roger’s a good guy, and we all owe him a lot as an industry. It’s really sad to see something like this happen and see him potentially face a double dose of prison.
You know, he was mostly just left to his own devices, floating around the world doing stuff. All you Bitcoin Maxis and orange pill people, these are the kinds of people that actually made Bitcoin work. It would have never taken off had businesses not accepted it and people not evangelized it. There was only a very small set of people back in the early days who actually did these things. We wish Roger well and hope that he’s able to get all these things cleared up. I hope that the allegations are not true. Oftentimes, they are, because accounting is accounting and numbers are numbers. The government typically doesn’t bring cases like this unless they have overwhelming evidence.
Unfortunately, I’m not terribly optimistic about the outcome, but regardless, I hope that he gets through it and that the industry as a whole will be better with his return on the other side. God bless you, Roger, and if there’s anything anybody can do to help, let us know. Cheers.
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