Karl Racine, the Attorney General for the District of Columbia in Washington DC, has revealed that the district is suing renowned Bitcoin Maximalist Michael Saylor and his software company, MicroStrategy (MSTR), for tax fraud.
According to Racine’s announcement, Saylor has resided in Washington’s Columbia District for over a decade but is yet to pay a dollar of income tax. He added that the district will also pursue MicroStrategy for “conspiring” to help Saylor evade taxes.
The allegations facing Saylor and MSTR
The attorney general’s office (AGO) alleges that Saylor owes more than US$25 million in taxes for income he earned during his time as a Washington DC resident. The allegations detail that the financial penalties facing Saylor and MicroStrategy could add up to more than US$100 million.
The case originated with a whistleblower, who filed the following complaint in April 2021 under DC’s False Claims Act.
“Demonstrating his disdain for the rules that everyone else has to live by, Saylor publicly flaunted his billionaire lifestyle while bragging to his friends and associates about how he was evading District taxes,” reads the complaint.
Racine added that the lawsuit — the first under the newly amended False Claim Act — will put any tax evaders in the Columbia District on notice.
“With this lawsuit, we’re putting residents and employers on notice that if you enjoy all the benefits of living in our great city while refusing to pay your fair share in taxes, we will hold you accountable,” declared Racine.
The most notable of the attorney general office’s claims against Saylor were allegations that
MicroStrategy had “collaborated with Saylor to facilitate his tax evasion”, stating that the company had “detailed information confirming that Saylor was in fact a DC resident”, but chose not to provide his address to local authorities or withhold the appropriate tax.
The AGO additionally claimed that Saylor resides in “a 7,000 square foot penthouse on the Georgetown waterfront” and has docked “at least two of his luxury yachts” in the District for extended periods of time. According to the authorities, Saylor’s net worth is estimated to exceed US$1 billion as a result of earning “hundreds of millions of dollars in ordinary income and capital gains” since 2005.
Saylor disagrees with the allegations
In a statement to Bloomberg, Saylor pushed back against the allegations.
“I respectfully disagree with the position of the District of Columbia, and look forward to a fair resolution in the courts.”
“Although MicroStrategy is based in Virginia, Florida is where I live, vote, and have reported for jury duty, and it is at the center of my personal and family life,” Saylor said.
What does this mean for Bitcoin?
Owing to MicroStrategy’s (MSTR) status as the largest public holder of Bitcoin — with a current portfolio of 129,699 BTC valued at US$2.6 billion — anything that impacts the company’s ability to HODL could have significant repercussions on the broader crypto market.
Following the announcement that Saylor would be facing charges, the price of Bitcoin remained steady at roughly US$20k while shares in MicroStrategy dropped 4.5%, although it remains to be seen what the full implications of the lawsuit may be for Bitcoin and MicroStrategy.
Early last month, Saylor announced that he would be stepping down as the CEO of MicroStrategy, and assuming a new role as the company’s “executive chair”. Replacing Saylor as director was MicroStrategy’s former president, Phong Le, who officially took on the role of CEO six days later on August 8. Unsurprisingly, Saylor said his decision to step down would help the firm pursue its relentless strategy of “acquiring and holding Bitcoin”.