Bitcoin Jesus and a Maryland Attorney: A Deep Dive into Two High-Profile Crypto Tax Cases

Two recent criminal tax cases, one focusing heavily on cryptocurrency and the other less so, reveal how digital assets are increasingly becoming central to criminal tax investigations. These cases offer a glimpse into the evolving legal landscape surrounding cryptocurrency and tax compliance.

The 'Bitcoin Jesus' Indictment: Roger Ver's Tax Troubles

In April 2024, Roger Keith Ver, widely known as "Bitcoin Jesus," was indicted by the U.S. Department of Justice on a range of fraud and tax-related charges. These charges include mail fraud, tax evasion, and filing false tax returns. The indictment alleges that Ver, having expatriated to St. Kitts and Nevis in 2014, concealed assets and provided false information during the expatriation process to avoid paying taxes, including an "exit tax" on his considerable Bitcoin holdings. The Department of Justice claims Ver allegedly sold tens of thousands of bitcoins without reporting the income or paying taxes on distributions from his U.S.-based companies, resulting in an estimated $48 million loss for the IRS. The U.S. government initiated efforts to extradite Ver from Spain to face trial.

Ver, in his motion to dismiss, argues that the exit tax itself is unconstitutional, citing the vague legal standards surrounding cryptocurrency taxation. He also claims that the evidence presented in the indictment is incomplete, asserting he attempted to comply with tax laws despite the lack of clear government guidance during the relevant period. Many tax professionals have faced difficulties addressing complex questions around digital assets due to insufficient IRS guidance.

The government's opposition to Ver's motion to dismiss initially focuses on the "Fugitive Entitlement Doctrine", arguing that Ver's pre-trial motions should be disregarded until his extradition is complete. Even if this argument fails, the government contends that not all charges hinge on the constitutionality of the exit tax. Moreover, the government challenges Ver's constitutional claims, disputing his assertion that unrealized appreciation in asset value cannot be taxed as income, referencing the Supreme Court ruling in Moore v. United States. The case highlights the ongoing debate about the legal and constitutional implications of taxing cryptocurrency.

A hearing on Ver's motion to dismiss is scheduled for February 10, 2025, and the outcome will have significant implications for future cryptocurrency tax enforcement.

A Maryland Attorney's Fall: Thomas C. Goldstein's Crypto and Tax Charges

A Maryland attorney, Thomas C. Goldstein, was indicted in January 2025 on 22 counts, including tax evasion, assisting in the preparation of false tax returns, failure to pay taxes, and making false statements to mortgage lenders. The indictment involves numerous allegations spanning several years. The accusations include omitting legal fee income, misreporting gambling winnings and debts, and establishing "sham employment relationships". Adding another layer of complexity, the indictment also alleges Goldstein conducted 280 cryptocurrency transactions but answered "no" on his tax return regarding any virtual currency transactions.

Goldstein's case differs from Ver's in that it does not primarily center around early cryptocurrency adoption. While the indictment includes actions dating back to 2016, the cryptocurrency-related claims are largely focused on his 2020 and 2021 tax returns. Critically, Counts 13 and 14 allege Goldstein aided in preparing a fraudulent tax return by falsely answering "no" to a question about virtual currency transactions. This question, introduced in 2019 and prominently placed on the 2020 tax form, has brought the issue of cryptocurrency reporting into sharper focus.

The increased prominence of the cryptocurrency question on tax forms coincided with a surge in cryptocurrency trading in 2020. This resulted in a considerably larger number of taxpayers holding cryptocurrency investments. Consequently, this type of criminal tax charge could see a significant increase in frequency in individual criminal tax cases in the coming years. The government's approach to this allegation in the ongoing case and its potential deterrent effect on other cryptocurrency holders will be noteworthy.

The Future of Crypto and Tax Compliance

The cases of Roger Ver and Thomas C. Goldstein represent significant milestones in the ongoing evolution of cryptocurrency taxation and enforcement. The legal challenges presented by these cases highlight the need for clearer and more comprehensive guidance from regulatory bodies to ensure compliance and prevent future issues. These situations underscore the complexity of applying existing tax laws to the rapidly changing world of digital assets, raising questions about the balance between enforcement and the clarity of the legal framework itself. The decisions made in these cases will undoubtedly shape the future of cryptocurrency tax regulation and enforcement, potentially impacting how individuals and companies handle their digital assets. These are just the first two high-profile cases, signaling a clear trend in how authorities are approaching the oversight of cryptocurrency and its impact on tax revenues. The coming years will undoubtedly reveal further developments in this dynamic area of law.