Bitcoin Billionaire Settles Tax Suit | Crypto Resumes Lobbying Efforts

The asset manager’s new short-term credit fund is hosted on the Ethereum blockchain.

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Mitchell Martin Senior Editor, Forbes Money & Markets
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Steven Ehrlich Director, Forbes Digital Assets
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BITCOIN BILLIONAIRE SAYLOR SETTLES D.C. TAX-DODGE SUIT FOR $40 MILLION

Michael Saylor, chairman of bitcoin stockpiler MicroStrategy, settled a suit with the District of Columbia, which claims he falsely maintainednot to live there for several years, avoiding income-tax payments. Saylor—worth $4.8 billion, according to the latest Forbes tally—agreed to pay $40 million to settle the D.C. complaint, without admitting to the allegation. MicroStrategy, the business-software company that he founded, was also involved because it tracked how many days he spent in the district.

Saylor could hardly deny he spends time in Washington; he owns a 7,000-square-foot penthouse in Georgetown that he calls Trigate—it was cobbled together from three smaller units. But he claimed to be a resident of low-tax Virginia until 2011, and then started to say he lived in Florida, which has no income levy. D.C. has graduated personal income-tax rates of 4% to 10.785%, almost double the Virginia levels. It did not help Saylor’s case that he referred to the Georgetown property as his “future home” in a September 2012 Twitter post.

Saylor issued a statement, saying, “As I stated at the time this case began, in 2012 I moved to Florida and made Miami Beach my home. Florida remains my home today, and I continue to dispute the allegation that I was ever a resident of the District of Columbia. I have agreed to settle this matter to avoid the continued burdens of the litigation on friends, family, and myself.”

Read the full story: Bitcoin Billionaire Saylor Will Settle D.C. Tax Suit For $40 Million

IRS SCALES BACK $44 BILLION FTX TAX CLAIM TO AS LITTLE AS $885 MILLION

FTX has indicated in bankruptcy court filings that the U.S. Internal Revenue Service will accept as little as $885 million to settle claims against the exchange, down from its initial claim of $44 billion, later amended to $24 billion. Later, the agency calculated that the amount it thought it could prove in court was just $8 billion of income and employment taxes owed. According to the settlement documents, FTX “vigorously” disputed that the company was liable for “misappropriation income” resulting from founder Sam Bankman-Fried’s theft of FTX customer funds, employment tax liability for compensation allegedly paid to Bankman-Fried and others, and the proposed disallowance of a large amount of deductions and losses for lack of substantiation.

The $885 million settlement allows the parties to resolve the IRS claims without the time and expense of litigation. Of the total, $200 million is to be treated as a priority claim payable within 60 days of the settlement. The remaining $685 million would be considered a lower-priority claim and payable “to the extent of funds available.”

A hearing is scheduled for June 25.

CURRENT PRICE OF TOP 5 COINS (7-Day % Change)

Coin

Price

Percent Change

Bitcoin (BTC)

$69,269

1.3%

Ether (ETH)

$3,693

2.9%

Tether (USDT)

$0.9995

0.2%

Binance Coin (BNB)

$685

14.5%

Solana (SOL)

$163

2.7%

Sources: Forbes Digital Assets, CoinGecko. Prices as of 5:00 p.m. on June 7, 2024.

CRYPTO TRIES AGAIN TO TAKE THE HILL

The last time the cryptocurrency industry tried to up its lobbying presence in Washington, the efforts were spearheaded by Sam Bankman-Fried, currently a long-term guest of the government he sought to influence. Following the collapse of Bankman-Fried’s financial empire and his sentencing to 25 years in prison, politicians have understandably been wary of further conversations with industry representatives. This caution has persisted until recently, with several notable events occurring in 2024 that indicate that crypto is here to stay and its voice will grow louder on Capitol Hill.

Among recent developments illustrating the industry’s rising profile are Donald Trump’s embrace of digital currencies for campaign contributions, more than $100 million raised by crypto political action committees (PACs) and the (second) $25 million contribution to the SuperPAC Fairshake by Ripple Labs.

As crypto funds and investors continue to pour money into politically oriented entities like PACs, crypto issues will increasingly be campaign issues. Especially because the demographic groups most likely to own digital assets—Millennials and Gen Z—are also among the voters least likely to trust the government, the implications are clear: politicians at every level will have an incentive to take crypto issues seriously. Read more.

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