U.S. Sen. Ron Wyden (D-OR) is leading an investigation into whether a cryptocurrency billionaire improperly avoided taxes.
The investigation is focused on Dan Morehead, founder of Pantera Capital founder and billionaire cryptocurrency investor. Wyden is looking into whether Morehead avoided more than $100 million in U.S. taxes by misrepresenting his residency status and abusing a Puerto Rican tax program.
Wyden, ranking member on the Senate Finance Committee, initiated the investigation with outreach to Morehead in early January. However, Morehead has failed to respond to inquiries from committee investigators after his attorneys initially indicated a willingness to cooperate.
In a new letter sent to Morehead last week, Wyden questioned Morehead about his tax planning related to a transaction in excess of $1 billion, as well as the timeline of his residency in Puerto Rico.
“My staff received information indicating that shortly after you relocated to Puerto Rico and obtained a PR tax grant, Pantera Capital sold a large position and generated capital gains in excess of $1 billion,” Wyden. “It is my understanding your share of these gains … was hundreds of millions of dollars. It is also my understanding that you treated the entire [gain] as exempt from U.S. tax, even though the lion’s share of these gains accrued while you still resided in California. These are serious allegations of potential abuse of Puerto Rico tax incentives to avoid the payment of U.S. taxes that you must immediately address.”
Wyden asked Morehead to answer a series of questions related to this matter by October 15.
“IRS personnel also indicated to Senate Finance Committee staff in a briefing that there were several ongoing investigations by IRS criminal agents and federal prosecutors involving situations where a taxpayer potentially misrepresented facts with respect to bona fide residency in Puerto Rico or sourcing of income on tax returns. In addition to the recent prosecution of Suresh Gajwani, my understanding is that federal prosecutors in South Florida are also conducting criminal investigations into attorneys who knowingly provided taxpayers inaccurate legal opinions advising them to treat U.S. source income as Puerto Rico source income,” Wyden wrote in the letter.