Prominent Cryptocurrency Investor Faces Senate Tax Inquiry

A Senate committee is investigating whether a prominent cryptocurrency investor violated federal tax law to save hundreds of millions of dollars after he moved to Puerto Rico, a popular offshore tax haven, according to a letter reviewed by The New York Times.Senator Ron Wyden, an Oregon Democrat, sent the letter on Jan.9 to Dan Morehead, the founder of Pantera Capital, one the largest crypto investment firms.The letter said the Senate Finance Committee was investigating tax compliance by wealthy Americans who had moved to Puerto Rico to take advantage of a special tax break for the island’s residents that can reduce tax bills to zero.The investigation was focused on people who had improperly applied the tax break to avoid paying taxes on income that was earned outside Puerto Rico, according to the letter.“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 letter said.The letter requested detailed information from Mr.Morehead about $850 million in investment profits he made after moving to Puerto Rico in 2020, noting that he “may have treated” the gains as exempt from U.S.

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