FT Cryptofinance: Michael Saylor's tax problems

Hello and welcome to the FT. This week we take a look at Michael Saylor, one of the loudest Bitcoin supporters in the world.

Some people are inextricably linked to the definition of epochs of the market craze.

The names of Jack Grubman and Henry Blodget, analysts of Wall Street, help to tell the history of the Dotcom era. Dick Fuld, Chuck Prince and Jimmy Cayne, heads of Lehman Brothers, Citigroup and Bear Stearns, are engraved in the narrative of the 2008 financial crisis. Michael Saylor is one of the best known names for the boom and the bankruptcy of the 2021-22 cryptocurrency. Just as Bitcoin has forgotten a year, the 57-year-old software manager does it.

A brief memory for uninitiated: Saylor was the CEO of Microstrategy, a company for corporate software, but became the most important evangelist of Bitcoin during the boom. He tried to pack the technology in gnomic phrases such as "Bitcoin is the most desirable good in space and time" while plowing company money in the original and largest cryptocurrency. In June of this year, the submissions showed that Microstrategy Bitcoin worth around $ 4 billion, compared to $ 5.7 billion in late 2021.

Then the crash came. The value of Bitcoin has broken down by over 50 percent in the previous course and has hardly shown any signs of relaxation. After observing how his company's financial resources shrank on the wrong side of the bet, he resigned from Microstrategy last month to become Executive Chair with responsibility for the "Bitcoin acquisition strategy". Hmm.

This week it got worse for Saylor. The Attorney General of the District of Columbia sued him for tax evasion and claimed that he avoided paying more than $ 25 million in taxes in the US capital by pretending to live in Florida, although he actually lived in Washington DC.

The suit is a fascinating reading, if only to see how the AG office-with the help of a whistleblowers-has searched social media contributions, yacht photos, local newspapers and flight protocols from private jets to build up his case.

Saylor said he did not agree to the lawsuit and live in Florida.

Saylor's level of awareness could be a warning shot for others. The lawsuit quotes an interview that Saylor gave in January 2021, in which he said that Bitcoin was an ideal instrument for tax evasion.

Where to next for one of the shimmer of crypto personalities? Microstrategy says that the lawsuit is a "personal tax matter" for Saylor, even if the supervisory authority named the company as a defendant and claimed that it was conspiracy to help him rear the taxes he owed. The company added that "the allegations of the District of Columbia are wrong against the company and that we will aggressively defend ourselves against this exaggeration".

writing farewell pieces can be premature. As a current portrait of Saylor from my colleague Richard Waters found, he has a rock -solid self -confidence.

Indeed, a man who is ready to do so Is that the goddess of wisdom serves, feed on the fire of trust and, behind a wall made of encrypted energy exponentially, always smarter, faster and stronger, ”is not a lack of self -confidence.

• Some mistakes are more amusing than others, and the disappearance of Optifi is not disappointed. It was a decentralized exchange that was operated by Solana until Monday, when a developer who worked on an upgrade, accidentally drove down the entire project until the restoration. The developers showed their defense best Could But it's not a story that covers her with fame. Optimistically, they asked their users: "How can we do it better?" In the blockchain, not only transactions are unchangeable. Your mistakes are too.

• Traditional finances have some security precautions for stupid errors. Crypto.com has made a court decision in Australia to return its funds after it accidentally transferred 10.5 million AUD to an Australian instead of a reimbursement of 100 AUD. The company did not notice it for seven months. She spent part of it for a house, but the court ordered her to sell the property and repay the money.

• The Ukrainian police are hard against crypto. A search of alleged call centers revealed a criminal system that supposedly misappropriated money from citizens in the entire Ukraine and the EU under the guise of crypto, securities, gold and oil trade.

• Sam Bankman-Fried, Managing Director of the FTX crypto exchange, has some high-tied ambitions, but the purchase of the competing Stock Exchange Huobi is not one of them. This week he tweeted: "Just to make it clear, because apparently many people say: No, we don't plan to take over Huobi."

Soundbite of the week: Congressman is targeting crypto fraudsters

The MEP Raja Krishnamoorthi, who is also chairman of the subcommittee for economic and consumer policy, sent letters to Binance, Coinbase, FTX, Kraken and Kucoin and asked for information on how to combat crypto fraud. The Ministry of Finance and the Securities and Exchange Commission were also on the list of recipients.

"The lack of a central authority for the labeling of suspicious transactions in many situations, the irreversibility of transactions and the limited understanding of many consumers and investors about the underlying technology make cryptocurrencies a preferred transaction method for fraudsters."

data-mining

A few weeks ago we dealt with the Merge in this newsletter, a long-awaited upgrade of the Ethereum blockchain, which aims to drastically reduce the CO2 footprint.

At the time of writing, it will probably still take place between September 15th and 19th, but the developers have not set a fixed period.

Nobody really knows what this means for the price of ether, the local currency of Ethereum, because such a significant change in such a large blockchain is unexplored in the short history of crypto. Last month Ether made a tour of $ 1,500 to $ 2,000 and back.

In the past three months, according to the data from the FT Wilshire Digital Assets Dashboard, there has also been a decline in the active Ethereum wallet addresses by 65 percent. Typically, an increase in unique wallet activity signals a generally positive market mood.

The appointment market, which is often used for betting at the price of cryptocurrencies, indicates that many dealers prepare for the unexpected. According to Kaiko Research, the number of Ether-Futures' Contracts stages at an all-time high, and most bets are geared towards a decrease.

This could be an insurance as well as speculation. Overall, the signals indicate that investors consider the possibility of both faster profits and sudden declines in the coming weeks.

that was for this week. We'll see you at the same time next Friday. Have a nice weekend!