Dan Morehead Under Scrutiny: U.S. Probes Crypto Billionaire's Puerto Rico Tax Haven

Pantera Capital's founder, Dan Morehead, is currently under investigation by U.S. regulators for alleged tax violations. The probe centers around Morehead's relocation to Puerto Rico, a region known for its tax haven status. The U.S. Senate Finance Committee (SFC) has requested information on over $850 million in investment profits earned by Morehead, which they believe may have been treated as exempt from U.S. taxes.

The special tax break in Puerto Rico can reduce the taxes of island residents to zero, making it an attractive destination for wealthy individuals looking to minimize their financial obligations. However, the SFC letter, sent on January 9 by Oregon Democrat Senator Ron Wyden, suggests that the majority of Morehead's gains are U.S. source income and subject to U.S. tax.

This investigation is part of a broader effort by tax regulators to crack down on wealthy individuals' strategies to evade tax. The probe intensified after Sen. Wyden took over as chairman of the Finance Committee. While it remains uncertain what the investigation will reveal, it is worth noting that the Trump administration has taken a less aggressive stance towards crypto projects since his inauguration.

In response to the accusations, Morehead clarified that he moved to Puerto Rico in 2021, not 2020, as previously suggested. He also stated that he believes he acted appropriately with regard to his taxes.

As part of the Trump administration's less-stringent approach towards cryptocurrencies, Eric Trump announced the introduction of zero capital gains tax for certain digital assets. However, those not based in the U.S. will be required to pay approximately 30% capital gains tax. This tax incentive aims to encourage innovation in the sector. Additionally, Senator Ted Cruz is working on a Congressional Review Act resolution to overturn an IRS rule that requires Decentralized Finance (DeFi) brokers to provide user data and report gross proceeds.