A Senate committee is examining whether a well-known cryptocurrency investor potentially violated federal tax laws to avoid hundreds of millions of dollars in taxes after relocating to Puerto Rico. This information comes from a letter reviewed by The New York Times.
Senator Ron Wyden, a Democrat from Oregon, sent the letter on January 9th to Dan Morehead, the founder of Pantera Capital, a major player in the crypto investment sector.
The letter indicates that the Senate Finance Committee is looking into the tax compliance of affluent Americans who have moved to Puerto Rico to take advantage of a specific tax incentive available to residents of the island. This incentive can potentially reduce their tax obligations to zero.
The investigation is specifically targeting individuals who may have incorrectly applied this tax break to avoid paying taxes on income earned outside of Puerto Rico. The letter pointed out that “In most cases, the majority of the gain is actually U.S. source income, reportable on U.S. tax returns, and subject to U.S. tax.”
The committee has requested detailed information from Morehead regarding $850 million in investment profits he earned after moving to Puerto Rico in 2020. The letter noted that he “may have treated” these gains as exempt from U.S. taxes.
