Washington

Michael Saylor is still on the hook for alleged tax evasion, says MicroStrategy filing

A D.C. court denied a motion to dismiss claims that Michael Saylor failed to pay personal income taxes, with a status conference on the matter scheduled for March.

The Office of the Attorney General for the District of Columbia in the United States is moving forward on a lawsuit against business intelligence firm MicroStrategy executive chair Michael Saylor related to tax evasion.

According to a Feb. 28 filing with the U.S. Securities and Exchange Commission, MicroStrategy said the court had not dismissed a claim against Saylor for failing “to pay personal income taxes, interest and penalties due” following an October 2022 motion from the firm. However, the court granted a motion dismissing allegations that Saylor — on his own and acting in concert with MicroStrategy — violated the District of Columbia’s False Claims Act.

Former D.C. Attorney General Karl Racine announced a lawsuit against Saylor and MicroStrategy in August 2022, alleging the co-founder “never paid any DC income taxes” and the company “conspired” to assist him in tax evasion. At the time, authorities said Saylor owed more than $25 million in taxes for income earned while he was a D.C. resident, but penalties from both the former CEO and MicroStrategy could total more than $100 million.

Racine left the Attorney General’s office in January after announcing he would not seek reelection. According to the MicroStrategy filing, there will be a “status conference” on the lawsuit on March 10.

“The final outcome of this matter is not presently determinable,” said the filing.

Related: OECD releases framework to combat international tax evasion using digital assets

According to the Attorney General’s complaint, MicroStrategy had “detailed information” on Saylor’s residency in Washington, D.C., but the company collaborated with the former CEO to “facilitate his tax evasion” rather than reporting it to authorities. Saylor stepped down as the CEO of MicroStrategy in August 2022, succeeded by then company president Phong Le.

Crypto industry lobbying expenses up 120% in 2022 in the US

Coinbase remains a leader in lobbying expenditure for the sixth year, but Binance.US is accelerating its efforts.

The crypto industry has been raising its lobbying efforts amid the crypto winter that began last year. In 2022, market participants spent $25.57 million on lobbying in the United States. 

This number appears in a study published by the Money Mongers on Feb. 23. The count is based on data from OpenSecrets, a nonpartisan nonprofit, tracking the lobbying expenses (which should be publicly accessible by law) in the U.S.

According to this data, the general rise of the industry’s lobbying budgets made up 922% in five years between 2017 and 2022. In 2017, when the price of Bitcoin rocketed for the first time, the young industry spent only $2.5 million on lobbying efforts, while last year, this number stood at $25.57 million. In the previous year alone, the stakeholders raised their expenses by 121.41% from $11.54 million in 2021.

The leader of the spender’s list is the U.S.-based crypto exchange Coinbase, which paid $3.3 million to 32 lobbyists in 2022. The top three is completed by the Blockchain Association, with 18 lobbyists ($1.9 million), and Robinhood with 20 lobbyists ($1.84 million).

The American subsidiary of the world’s largest crypto exchange, Binance.US, occupied only the ninth spot on the list with $960,000 spent in 2022. However, Coinbase’s level of early expenditure remained steady — dishing out around $1–1.5 million each year — whereas Binance.US started spending only in 2021, raising its efforts from $160,000 to almost $1 million in twelve months.

Related: Americans ‘frustrated’ by financial system inequality, 20% own crypto

The overall expenditure of crypto companies on lobbying in America is slightly over $50 million in six years, which is more than modest if we compare this number with other industries. For example, pharmaceutical companies spent over $350 million in 2022 on federal lobbying efforts.

US crypto regulation happening ‘behind closed doors’ — Blockchain Association CEO

The “work has been done” for stablecoin regulation in the U.S., but many in Washington D.C. are feeling “burned” and “betrayed” over the FTX collapse last year.

The United States Congress needs to take control of crypto legislation and make it a more “open process” where the entire marketplace is looked at “comprehensively,” suggests Kristin Smith, CEO of the Blockchain Association — a prominent U.S. crypto industry nonprofit.

In a Feb. 22 Bloomberg interview, Smith said the industry needs U.S. lawmakers to lead crypto legislation despite it making the process “very slow,” with regulators “stepping in” in the interim.

Smith noted that despite regulators “moving very quickly,” progress on legislation is happening “behind closed doors,” suggesting it’s vital for more industry involvement in an “open process,” which would involve Congress.

Smith believes the issue with regulators leading legislation with enforcement actions and settlements relates to “very specific facts and circumstances.”

She explained it’s a difficult position for Congress at the moment, as many in Washington D.C. who “were close” to former FTX CEO Sam Bankman-Fried and FTX feel “burned” and “betrayed” over the collapse of the cryptocurrency exchange in November 2022.

Smith is hopeful that stablecoin regulation will soon happen in the U.S., saying Congress has been looking at it “since 2019” and the “work has been done.” She said it “came close” to happening last year before the collapse of FTX.

Related: FTX poked the bear and the bear is pissed — O’Leary on the crypto crackdown

She added that crypto risks are different from traditional financial services, so regulators must spend more time looking at market regulation and “tailor to those risks.”

Smith suggested that stablecoin and “market side” regulation should be a higher priority than focusing on legislating crypto-related criminal activity, saying that public ledgers make it “much more transparent” than we see in the traditional financial system.

This comes after the Blockchain Association’s chief policy officer, Jake Chervinsky, took to Twitter on Feb. 15, stating that no matter how many enforcement actions the Securities and Exchange Commission and Commodity Futures Trading Commission bring, they are “bound by legal reality,” adding that “neither” has the authority to “comprehensively regulate crypto.”

Coinbase CEO invites DC residents over for ice cream and crypto talk

Brian Armstrong said he had about an hour at the Dirksen Senate Office in Washington, D.C. to “chat about crypto” and enjoy low-sugar food at the building’s snack bar.

Brian Armstrong, CEO of United States-based cryptocurrency firm Coinbase, is looking for lawmakers and regulators to discuss regulatory clarity in the crypto space.

In a Feb. 13 tweet, Armstrong put a call out for anyone with access to the Dirksen Senate Office in Washington, D.C. to meet him at the building’s snack bar and “chat about crypto.” According to the Coinbase CEO, he was looking for “low sugar options” amid the selection of soft serve ice cream and toppings.

“I’m in Washington D.C. and had a meeting canceled,” said Armstrong. “If anyone wants to come chat about crypto and how we get crypto legislation + regulatory clarity this year.”

Brian Armstrong at the Dirksen Senate Office Building on Feb. 13. Source: Twitter

Armstrong’s presence in D.C. followed the Securities and Exchange Commission announcing a $30-million settlement with Kraken on Feb. 9, in which the firm agreed to shut down its staking program for U.S. users. The Coinbase CEO argued in a Twitter thread responding to rumors that eliminating staking would be a “terrible path for the U.S.” On Feb. 12, he released a statement saying Coinbase would defend staking “in court if needed.”

Related: Coinbase CEO announces documentary on cryptocurrency and exchange

The Coinbase CEO’s call to senators, House representatives and other D.C. residents preceded U.S. lawmakers with the Senate Banking Committee preparing to hold a hearing on Feb. 14 exploring the impact of a crypto market crash. Representative Maxine Waters, ranking member of the House Financial Services Committee, has also called on the committee’s leadership to hold another hearing on the collapse of FTX in which former CEO Sam Bankman-Fried could testify.

Roman Catholic Archdiocese of Washington, DC will accept crypto donations

Crypto donations platform Engiven’s page for the archdiocese includes the option to send funds anonymously using many tokens, from Ether to ZRX.

The Archdiocese of Washington, D.C. of the Roman Catholic Church will begin accepting donations in cryptocurrency as part of an effort to grow its ministries.

In a Tuesday announcement, crypto platform Engiven said it would facilitate donations to the Roman Catholic Archdiocese of Washington, D.C. for fundraising efforts and to increase the church’s “digital stewardship initiatives.” According to the archdiocese’s website, the funds will be used to directly support 139 D.C.-area parishes as well as local programs, including providing food to those in need.

“The Roman Catholic Archdiocese of Washington, D.C. seeks to leverage technology to engage parishioners in new and exciting ways, making it easier for the faithful to fulfill the mission of the Church,” said Joseph Gillmer, executive director of development for the archdiocese.

Engiven’s page for the archdiocese included the option to send donations anonymously in many cryptocurrencies, from Bitcoin (BTC) to 0x’s ZRX. According to the platform, funds designated for individual parishes receive 100% of the net proceeds of donations.

Cointelegraph reported in November that Engiven had facilitated crypto donations for more than 400 faith-based organizations, including processing a single BTC donation for $10 million. Founder James Lawrence said at the time that “no faith-based organization, church or non-profit can afford to neglect its online audience, donors and seekers” with crypto becoming a part of that ecosystem.

Related: Pro-Russian groups raised only 4% of crypto donations sent to Ukraine

While certain dioceses within the Roman Catholic Church seem to be open to using the latest technology, the Russian Orthodox Church said in February 2021 that it was not planning to accept cryptocurrency for donations, nor create its own digital currency. A spokesperson suggested at the time that church members send money over the phone rather than crypto. Russian President Vladimir Putin has since signed a bill into law prohibiting digital financial assets as payments in the country.