bitcoin

How MicroStrategy’s Michael Saylor Mega Lawsuit Could Affect Bitcoin


District of Columbia Attorney General Karl Racine is suing Bitcoin mega bull Michael Saylor, co-founder and executive chairman of MicroStrategy, for allegedly avoiding over $25 million in district taxes. The lawsuit also names MicroStrategy as a defendant, alleging it conspired to help it evade taxes it owes.

The future of finance: Generation Z and their relationship with money
Looking to diversify in a bear market? Consider These 6 Alternative Investments

“Defendant Saylor knowingly avoided income taxes owed to the District by fraudulently claiming to be a resident of other low-tax jurisdictions while maintaining his domicile and place of residence in the District, including including living in a luxury penthouse on the Georgetown waterfront and docking multiple yachts on the district’s Potomac shores from 2005 to present,” the court documents read.

The AG’s office is seeking to recover unpaid income taxes and penalties from Saylor and MicroStrategy that could total more than $100 million, according to a statement.

How the Lawsuit Affects Bitcoin

The potential effects of the lawsuit on Bitcoin, which has struggled for the past few months, could be difficult to temper, some say.

“With volumes drying up amid high inflation, we expect any story may have outsized potential to move the market,” said Hayden Hughes, co-founder and CEO of platform Alpha Impact. . “Michael Saylor’s IRS drama could be used to keep Bitcoin in the news for the wrong reasons. Traders on the Alpha Impact platform prepared for increased volatility across multiple exchanges, hedging positions using perpetual swaps.

Take our survey: Do you think student loan debt should be forgiven?

Hughes considers the potential $100 million tax bill “an inconvenience that won’t stop (Saylor) or put him behind bars.”

“The real risk here is that litigation will drag the crypto down the mud,” he said. “The ESG (environmental, social and governance) concerns raised in 2021 are remembered by many as having a lasting impact on prices as the Bitcoin narrative was negatively affected by the news. This litigation is only set to drag on for years, and Alpha Impact traders have prepared for volatility, taking advantage of futures positions.

DC’s lawsuit stems from an earlier complaint

In April 2021, a whistleblower filed a lawsuit against Saylor, alleging he failed to pay income taxes he was legally owed from 2014 through 2020, alleging that “Saylor engaged in a scheme crafted to create the illusion that he was living in Florida, a state with no personal income tax, while he was actually residing in the district.

After independently investigating the whistleblower’s tax evasion allegations, the AG filed its own complaint, alleging that MicroStrategy “actively conspired with Saylor to enable his fraud, including filing inaccurate W-2s with the address of his Florida property rather than his DC home, and failing to withhold and remit DC taxes.

MicroStrategy said in a filing with the Securities and Exchange Commission (SEC) on September 1: “The Company believes that the District’s claims against the Company are without merit and intends to aggressively defend against these allegations. .”

As for Saylor, he told CNBC that he bought a historic house in Miami Beach and moved there from Virginia ten years ago.

“Although MicroStrategy is based in Virginia, Florida is where I live, vote, and serve as a juror, and it’s central to my personal and family life,” he told CNBC. “I respectfully disagree with the District of Columbia’s position and look forward to a fair resolution in court.”

Saylor, who remains extremely bullish on Bitcoin despite the asset’s blows, stepped down as CEO on August 8 to become executive chairman.

“Bitcoin is a miracle happening right before our eyes,” he tweeted on August 31.

As of June 30, 2022, the book value of MicroStrategy’s 129,699 Bitcoins was $1.988 billion. Also as of June 30, the original cost base and market value of MicroStrategy’s bitcoin were $3.977 billion and $2.451 billion, respectively, reflecting an average cost per bitcoin of approximately $30,664 and a price of market per bitcoin of $18,895.02, according to financial releases.

Several experts agree that the money Saylor owes is a drop in the bucket for him, as he has a net worth of $1.6 billion, according to Forbes.

More from GOBankingRates


Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button