Roger Ver's Motion to Dismiss
Challenging unconstitutional charges and defending cryptocurrency innovation in a case that tests the limits of cryptocurrency taxation and due process.
Overview of the Motion
Roger Ver, known as a cryptocurrency pioneer and advocate for economic freedom, has filed a motion to dismiss criminal charges brought by the U.S. government. This legal motion highlights serious flaws in the indictment, including unconstitutional overreach, misuse of attorney-client privilege, and the application of vague and outdated tax laws to digital assets.
Key Legal Issues:
The "exit tax" underlying the charges is both unconstitutional and unprecedented
The prosecution relies on regulations that didn't exist at the time
The government misquoted evidence and ignored exculpatory communications
Legal precedent supports the dismissal of all charges
Case Status
Current Status: Motion filed
Hearing Date: January 6, 2025
Key Points of the Motion
No Clear Rules
When Ver handled his Bitcoin taxes in 2014, there were no IRS guidelines on cryptocurrency - the first guidance wasn't issued until weeks after Ver's expatriation. Despite this lack of clarity, Ver actively sought professional guidance to ensure compliance.
Good Faith Efforts
Ver hired multiple law firms and tax experts, consistently seeking guidance to ensure compliance. He repeatedly stated he wanted everything "as clean as possible" with "no room" for IRS issues, and maintained transparent communication with his advisors throughout the process.
Market Reality
Bitcoin markets in 2014 were too small to sell large amounts without crashing the price. Ver obtained professional appraisals to account for this market limitation - a fact the government now ignores. The total Bitcoin market at the time was too thin to support large sales.
Constitutional Issues
The government's case relies on an unconstitutional "exit tax" and applies unclear regulations retroactively. The charges violate basic principles of due process and fair notice.
Government Overreach
Prosecutors selectively quoted Ver's communications while ignoring evidence of his compliance efforts. They also improperly accessed privileged communications between Ver and his lawyers.
Supporting Exhibits:
Exhibit 1: The Basics
Shows Ver's preparations for renouncing his U.S. citizenship, including finalizing tax filings and managing asset appraisals. It discusses the logistics of renunciation, such as obtaining a St. Kitts passport and scheduling embassy appointments. The correspondence also addresses the complexities of reporting Ver's Bitcoin holdings, real estate, and businesses, aiming to minimize tax liabilities while ensuring compliance.
Exhibit 2: Strategic Compliance
Ver and his legal team outline a detailed action plan for expatriation, focusing on compliance with U.S. exit tax requirements. The steps include calculating estimated taxes, obtaining appraisals for assets, filing necessary paperwork, and restructuring his business to align with his expatriation. The plan emphasizes making a clean financial and legal exit, minimizing penalties, and ensuring compliance with U.S. and international tax regulations.
Exhibit 3: Commitment to Transparency
Ver's communication with his legal and financial advisors addresses the valuation of Bitcoin for expatriation tax purposes, rental income reporting, and company appraisals. The advisors outline tax obligations using the fair market value of Bitcoin at the time of expatriation despite challenges due to the thin market. Discussions also include clarifying rental income data and selling Hawaii rental properties.
Exhibit 4: Advocacy for Fair Valuation
Ver discusses the challenges of accurately valuing his Bitcoin holdings for expatriation tax purposes with his legal and financial advisors. They explore methods for discounting the valuation of large holdings due to market impact but stress the need for third-party appraisals. The conversation also touches on rental income from Hawaii properties, clarifying expense and income discrepancies.
Exhibit 5: Defense of Accurate Assessment
Ver discusses Bitcoin valuation challenges for expatriation taxes with his advisors, focusing on discrepancies between IRS property rules and market realities. They suggest obtaining a third-party appraisal to account for market impact due to the size of his holdings. Ver also addresses business assets and ensures compliance by addressing company appraisals.
Exhibit 6: Logical Valuation Standards
Ver discusses challenges with accurately estimating tax liabilities related to Bitcoin holdings and other assets during his expatriation. He highlights the limited liquidity of Bitcoin markets, noting that liquidating his holdings would not reflect their assessed value. Ver raises concerns about distinguishing personal Bitcoins from those owned by his company.
Exhibit 7: Stand for Tax Fairness
Ver and his advisors discuss the valuation of Bitcoin holdings for expatriation tax purposes, addressing challenges like market volatility and incomplete records. Ver highlights the difficulty of assigning a fair market value due to the thin market and his significant holdings. The conversation explores possible methods for estimating basis and fair value.
Exhibit 8: Advocacy for Equitable Taxation
Ver communicates with a professional appraiser regarding the valuation of his Bitcoin holdings for expatriation tax purposes. The discussions highlight the challenges of valuing Bitcoin in an illiquid market, especially for significant holdings that could impact prices if sold. The appraiser proposes methods for determining a defensible valuation.
Exhibit 9: Pursuit of Clarity
Ver and his advisors discuss Bitcoin ownership and valuation complexities for expatriation taxes. Key issues include distinguishing Ver's personal Bitcoin holdings from those held on behalf of others or through his companies. Advisors propose allocating wallets based on associated accounts and transactions.
Exhibit 10: Precise Classification
Ver communicates with an appraiser regarding the valuation of his Bitcoin holdings for tax purposes, focusing on whether to classify them as personal or entity-owned assets. The distinction significantly impacts tax implications. The appraiser emphasizes the importance of risk adjustments in valuation.
Exhibit 11: Equitable Tax Treatment
Ver and his legal team discuss strategies for accurately reporting Bitcoin holdings and minimizing tax liabilities. They consider whether Bitcoins should be classified as personal assets or as property of MemoryDealers Japan. Ver explores the possibility of reporting the Bitcoins as gifted to his partner.
Exhibit 12: Commitment to Accurate Reporting
Ver and his advisors work on estimating Bitcoin gains and reporting requirements for tax purposes. They address challenges in reconstructing historical records for Bitcoin transactions, including those involving personal expenses and MemoryDealers Japan. The team plans to treat transfers of a Bitcoin wallet as a taxable gift.
Exhibit 13: Compliance and Fair Taxation
Ver consults with tax advisors about the potential sale of MemoryDealers, Agilestar, and associated real estate, exploring tax implications and reporting requirements. They discuss capital gains exemptions for nonresidents, emphasizing the need for real estate appraisals to ensure compliance.
Exhibit 14: Transparency in Tax Matters
Ver and his tax preparer review income and transactions for 2017 to ensure compliance with U.S. tax laws. Topics include cryptocurrency trades on U.S.-based exchanges, interest payments received in Bitcoin, and loans extended to U.S. persons. The preparer clarifies that cryptocurrency sales may be non-taxable foreign income.