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Ruholamin Haqshanas
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Ruholamin Haqshanas
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Dan Morehead, founder and managing partner of Pantera Capital, is facing a federal tax investigation following his relocation to Puerto Rico, a well-known tax haven.
The U.S. Senate Finance Committee (SFC) is examining whether Morehead improperly claimed tax exemptions on over $850 million in investment profits after moving to the island in 2020.
According to a Jan. 9 letter from Senator Ron Wyden, reviewed by The New York Times, Morehead may have classified these profits as tax-exempt despite U.S. laws that require reporting of income sourced from the mainland.
U.S. Expands Probe Into Wealthy Individuals Using Puerto Rico Tax Incentives
The investigation is part of a broader probe into high-net-worth individuals who have moved to Puerto Rico to take advantage of tax incentives.
“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 reportedly stated.
Morehead, in response, defended his tax practices, stating, “I believe I acted appropriately with respect to my taxes.”
He also clarified that he moved to Puerto Rico in 2021, not 2020 as initially suggested.
Pantera Capital, which Morehead founded, was the first cryptocurrency investment fund in the U.S.
Since its launch, the firm has reported substantial growth, with early investments increasing by over 130,000%, according to a blog post Morehead published on Nov. 26, 2024.
Pantera’s Bitcoin Fund, launched in 2013, achieved a lifetime return of more than 1,000 times its initial investment when Bitcoin was priced at $74.
Currently, Pantera Capital manages over $5 billion in assets, with investments spanning more than 100 ventures, nearly half of which are based outside the U.S.
Regulatory Scrutiny on Crypto Taxes Intensifies
Morehead’s case emerges amid heightened regulatory focus on cryptocurrency tax compliance.
In June 2024, the Internal Revenue Service (IRS) introduced new regulations requiring third-party reporting of cryptocurrency transactions for the first time.
Starting in 2025, centralized exchanges (CEXs) and brokers will be mandated to report the sales and exchanges of digital assets, including cryptocurrencies.
The rule has sparked concern within the crypto industry, with critics warning that it could push investors toward decentralized platforms, complicating tax enforcement.
In response to the new regulations, the Blockchain Association filed a lawsuit against the IRS in December 2024, arguing that the agency’s expanded definition of “broker” unfairly includes decentralized exchanges, imposing excessive reporting requirements.
Under the final regulations, brokers will be mandated to report gross proceeds from cryptocurrency and digital asset sales, as well as details about taxpayers involved in such transactions.
The new rules have also raised concerns among blockchain developers and decentralized finance (DeFi) advocates.
Platforms using smart contracts to facilitate transactions could now be classified as brokers, placing significant compliance burdens on developers of DeFi front-ends.
