- DC attorney general blasted MicroStrategy and its chair, Michael Saylor, for tax evasion.
- MicroStrategy and Saylor have settled the case for $40 million, but deny any wrongdoing.
- It is thought investigations began after Saylor had bragged about losing Bitcoin in a boating accident in 2021.
MicroStrategy is the biggest public company holder of Bitcoin, having accumulated a massive war chest of 214,400 BTC, valued at around $15 billion at current prices. The enterprise software firmโs aggressive treasury strategy, spearheaded by its chair, Michael Saylor, has made it a proxy for the worldโs largest cryptocurrency.
Sponsored
Saylor has been one of Bitcoin’s most vocal evangelists since MicroStrategy made its first purchase in August 2020. Many in the space now consider the billionaire tech executive the โface of Bitcoinโ as a result. However, Saylor’s reputation has taken a major hit after the District of Columbia (D.C.) Attorney General Brian Schwalb accused him of evading taxes and bragging about his exploits.
MicroStrategy and Saylor Under Fire
Attorney General Schwalb’s tax evasion statements dealt a major blow to Saylor’s image as an upstanding citizen and Bitcoin ambassador. According to Schwalb, Saylor will pay a $40 million settlement to end the investigation, making this case the biggest tax fraud recovery in D.C.โs history.
Schwalb stated, “Tax cheats freeload off the backs of hardworking, law-abiding, taxpaying Washingtonians while depriving the District of critical resources for public services including public safety, infrastructure, and education.” He firmly added that no one is above the law, regardless of their wealth or standing.
Despite the statements from Schwalb, the settlement terms allow MicroStrategy and Saylor to deny violating any applicable tax laws, while also admitting no wrongdoing as part of the agreement.
The allegations against MicroStrategy and Saylor can be traced back to a 2022 investigation launched by the previous D.C. attorney general.
Saylor Accused of Bragging
This incident stemmed from a 2022 investigation launched by then-D.C. attorney general Karl Racine, who accused Saylor of evading over $25 million in taxes and alleged that MicroStrategy had colluded with its chair in the tax avoidance scheme.
According to Racine’s complaint, Saylor had deliberately avoided paying taxes owed to D.C. by falsely claiming to reside in other lower-tax jurisdictions. Investigations revealed that Saylor maintained multiple luxury residences around D.C., including a 7,000-square-foot penthouse in Georgetown and mooring privileges for a yacht along the Potomac River.
At the time, Saylor denied the charges, claiming he had purchased a home in Miami Beach, Florida in 2012 and established it as his new primary residence after leaving Virginia, D.C.
Influencer โdbโ alleged that the 2022 probe began after Saylor openly bragged about using Bitcoin to evade taxes in a 2021 interview. Footage circulating on the internet showed Saylor running through a hypothetical where Bitcoiners can claim to lose their holdings in a “boating accident” if pushed too hard by tax authorities.
On the Flipside
- Saylor‘s actions were seen by authorities as flaunting wealth and encouraging others to dodge taxes.
- It is estimated the U.S. government has lost $2.4 trillion in making simple payment errors over the last 2 decades.
- U.S. debt repayment is forecast to reach $870 billion in 2024.
Why This Matters
This case signals that tax authorities are not afraid to target the ultra-wealthy by making an example of Saylor. It also reflects intensifying efforts to scrutinize crypto-related assets.
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