Roger Ver’s arrest is deplorable news for some, welcome news for the rest of us

Roger Ver’s arrest by U.S. authorities on tax evasion charges might perchance well well signal a turning point within the digital asset sector’s history as ‘crypto’ crooks turn on every other to assign their very have skins.

On April 30, the digital asset sector became vastly stunned by the news that the U.S. Division of Justice (DOJ) had charged Ver with mail fraud, tax evasion and filing fraudulent tax returns that allegedly cheated Uncle Sam out of “as a minimal” $Forty eight million. Ver became arrested over the weekend in Spain and is now looking ahead to extradition complaints.

The investigation into Ver was conducted with the help of the Internal Revenue Service’s Criminal Investigation (IRS-CI) cybercrimes unit. In November 2022, the IRS-CI announced that nearly half of all digital asset investigations now focus on tax fraud. One year later, the IRS-CI said it was seeing an increasing number of cases “where the taxpayer fails to disclose ownership of cryptocurrency in an attempt to conceal holdings.”

Ver’s alleged crimes include efforts to conceal his ownership of around 131,000 BTC tokens when he surrendered his U.S. citizenship in 2014, in the hope of minimizing his ‘expatriation’ tax bill. Unfortunately for Ver, the DOJ and IRS obtained internal communications between Ver, his attorneys, his tax preparers and others regarding his substantial holdings, in addition to his attempts to conceal this fact.

In other words, Ver appears to have little to no chance of successfully defending himself against the charges. Worse, Ver has a criminal history that will not play well before a judge or jury. In 2002, Ver was sentenced to 10 months in federal detention center for selling explosive materials on eBay. (More recently, he has developed a reputation for not paying eight-figure debts.)

Ver is also an avowed anarchist who has criticized the U.S. government at every opportunity and has viewed digital assets as a means of evading oversight or even bringing about the end of governments entirely.

Briefly, Ver is in trouble. Tax evasion measured in the tens of thousands and thousands is a serious offense, especially since Ver’s emails contain sufficient aggravating circumstances to make him vulnerable to a sentence of six years or more.

Except, of course, if Ver agrees to a deal in which he provides the feds with information on other suspected digital asset cheats or frauds who have so far evaded justice. The DOJ and IRS have made it clear that ‘crypto’ crime is high on their priority list, and Ver’s long history in this sector means he knows where to find the most incriminating evidence.

The most pressing question now is: whose cooperation will Ver provide?

Did Blockstream target Ver?

Ver was in Spain to promote his recently launched book, Hijacking Bitcoin: The Hidden History of BTC. The book is Ver’s account of the Bitcoin Civil War whereby the BTC Core developers imposed dictatorial control over Bitcoin, resulting in the BTC token (mistakenly viewed as Bitcoin by the general public), as well as Ver’s BCH fork and, ultimately, the restoration of the original Bitcoin in the form of BSV.

One of the less admirable figures in that conflict was Greg Maxwell, co-founder of Blockstream, supporter of small blocks and ruthless manipulator of his own online echo chamber of sock puppets. Maxwell has no liking for Ver, whom Maxwell views as a traitor for switching his allegiance from BTC to BCH all those years ago.

A four-year-old Reddit post that Maxwell made attacking Ver has resurfaced within the wake of the latter’s arrest and can provide a clue as to how/why the feds latched onto Ver’s slump. Within the post, Maxwell first quotes Ver asserting: “Taxation is theft. I am hoping every person escapes all taxes.” Maxwell then wonders if Ver paid all his required expatriation taxes when he renounced his citizenship, asserting:

Indubitably you didn’t veil your resources… that would were extraordinarily unwise pondering how widely you’re going to contain bragged about your holdings, especially pondering that the IRS will pay whistleblowers up to 30% of the underpayment when the total below-paid is as a minimal $2m.

Ver is also no fan of Blockstream CEO Adam Back, the most prominent public promoter of the Lightning Network (the ‘layer 2’ solution to the small-block-constrained BTC’s inability to fulfill Satoshi Nakamoto’s vision of peer-to-peer electronic cash).

Following the release of Ver’s guide, he and Abet began sniping at each other over X/Twitter, with Abet asserting “the density of lies and conspiracy nonsense, fiction, tabloid grade made up inferences [in Ver’s book] became insane.” Ver replied by asserting Abet “wishes to quit folk from discovering how he and his firm hijacked Bitcoin.”

Whereas Ver might not be on Blockstream’s Christmas card list, this sector remains small enough that everyone tends to know what everyone else is up to, even more so in these heady early days when regulators weren’t paying close attention. So Ver might have had sufficient dirt on Maxwell, Abet & Co. within the statute of limitations to secure some DOJ favors.

Meanwhile, if nothing else, Ver’s arrest will potentially boost sales of his guide, and thus the dishonest dealings of the BTC crew will change into extra widely identified amongst the general public. Wager every cloud has its silVer lining. (Sorry.)

With company like these…

Ver might also turn on the principals behind a number of digital asset exchanges. Take Erik Voorhees, founder of the ShapeShift exchange, whereby Ver became an early investor and thus might know where Voorhees’ pressure points lie.

Take care of Ver, Voorhees is an anarchy-inclined libertarian whose views on monetary regulations might not quite reach Ver’s “money laundering is not a criminal offense” stage—at least, not publicly—but Voorhees has said he doesn’t believe people “must have their identity recorded to commit an occasional felony.”

Voorhees has furthermore publicly bragged about taking millions of dollars in Covid-era Paycheck Protection Program loans for which ShapeShift might not have been eligible. Voorhees said he took the loans in line with his belief that he was clawing back some of the taxes the government “has stolen … from me,” which suggests a similarly entitled tax-avoidance mindset to Ver’s.

Then there’s Jesse Powell, co-founder of the Kraken exchange and, like Ver, another anarchist with little regard for governments. Here too, Ver was an early investor, befitting his high school friendship with Powell and their shared love of Magic: The Gathering. Who knows what secrets and schemes these two anarchic amigos have shared over time?

Each Kraken and ShapeShift have had costly run-ins with the SEC in recent years, yet they were also part of the anti-competitive delisting of the BSV token from exchanges. Binance’s Changpeng ‘CZ’ Zhao—who got his first ‘crypto’ job after meeting Ver on a trip to Japan—was first out of this delist gate in April 2019, and he may well know the extent to which Ver helped coordinate this sham. On the other hand, CZ has recently had his day in court, so strike him off Ver’s potential hit-list.

A turning point

Given his huge felony history, CZ’s absurdly gentle sentence of 4 months within the help of bars might perchance well merely label the model for Ver to follow. One day of Tuesday’s sentencing listening to, CZ’s attorneys twice referred to about a “compelling part” detailed in sealed paperwork that curiously justified the determine going easy on CZ. It doesn’t seem a stretch to mediate CZ might perchance well merely contain given the feds something juicy.

As for who CZ might have informed on, our money’s on either (a) his former acolyte Justin Sun, who has taken his ‘crypto Bond villain’ persona to absurd extremes, or (b) the Tether (USDT) stablecoin, which Binance once embraced but the partners-in-crime appear to have had a major falling out in July 2023, after which Binance shifted focus to a new stablecoin over which it appears to exert greater control.

May Tether also face felony charges—and could these charges be serious enough to prompt its leadership to confront serious risks—this could have a profound influence on the entire digital asset sector, which relies on Tether’s money-printer to artificially inflate the price of tokens like BTC.

A shift away from a tunnel-vision focus on ‘number creep up’ would constitute what looking back will label a fundamental makeover of this overall digital asset sector. As CZ himself tweeted on the day he became sentenced: “Our industry has entered a fresh segment. Compliance is neat foremost.” You don’t voice.

There will be another fundamental casualty of Ver’s true kind woes, and that’s the BCH chain he supports. Since his 2018 split with the camp that maintained its loyalty to the fresh Bitcoin (BSV), he has been the sole part within the help of BCH’s ongoing existence (which most likely explains its ‘crime coin’ standing).

With Ver now taking a detect at a prolonged stint within the help of bars, BCH’s standing might perchance well merely actually be enhanced amongst its most up-to-date customers. Nonetheless any individual no longer shopping for a fresh striped cloth wardrobe might perchance well contain great extra motive to present BCH a extensive berth.

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