Leading Democrat Wyden Continues Probe Into Pantera Founder Morehead’s Taxes

U.S. Senator Ron Wyden, the top Democrat on the Senate Finance Committee, is continuing his inquiry into whether Dan Morehead, the founder of asset manager Pantera Capital, sought to avoid paying taxes through his move to Puerto Rico.

Wyden's probe into whether Morehead committed tax evasion began in January, and is focused on how the Pantera founder reported taxes on his share of proceeds after a large crypto sale by the firm. According to a press release, Wyden is specifically looking at whether Morehead “misrepresent[ed] his residency status” when Pantera generated over $1 billion in capital gains from crypto sales by claiming his profits from the sale came while he was in Puerto Rico. Residents of the U.S. territory do not pay income tax on capital gains.

“It is my understanding your share of these gains … was hundreds of millions of dollars,” Wyden said in the letter, sent on Wednesday. “It is also my understanding that you treated the entire [gain] as exempt from U.S. tax, even though the lion’s share of these gains accrued while you still resided in California. These are serious allegations of potential abuse of Puerto Rico tax incentives to avoid the payment of U.S. taxes that you must immediately address.”

Wyden's letter alleged that Morehead's attorneys “have all but disappeared” despite initially engaging with his staff. He also said in the letter that he believes Morehead was advised by Jeffrey Rubinger, a Miami-based attorney who advised another client who “recently pled guilty to a tax fraud scheme” tied to the same Puerto Rico tax rules.

A Pantera spokesperson referred CoinDesk to a previous statement from Morehead, when he told the New York Times in a statement earlier this year that, “I believe I acted appropriately with respect to my taxes.”

Wyden's probe does not carry the full weight of an investigation by the Senate Finance Committee at the moment, given Democrats are the minority party in the Senate and committee Chair Mike Crapo — the top Republican on the committee — does not appear to have joined in the inquiry at this time.

Wyden's letter came the same day the Senate Finance Committee held a hearing on crypto tax issues specifically. Witnesses at the hearing warned that the IRS may soon face a deluge of tax reporting.

Read more: U.S. Senate Hearing on Crypto Taxes Reveals Headaches for Both Industry and IRS