MicroStrategy and its pro-Bitcoin founder, Michael Saylor, have agreed to a $40 million settlement to resolve allegations of income tax evasion. The New York Times reported on June 3 that the District of Columbia’s attorney general has finalized this agreement with Saylor and his company.
Landmark Settlement for Income Tax Fraud
Local officials have highlighted this settlement as the largest income tax fraud recovery in the district’s history. This case marks the first lawsuit under the district’s updated False Claims Act, which aims to encourage whistleblowers to report tax evasion by residents who conceal their residence information.
The District of Columbia filed the lawsuit against Saylor and MicroStrategy in August 2022. The lawsuit claimed that Saylor avoided paying income taxes in the district for over a decade. Allegedly, MicroStrategy assisted Saylor in evading more than $25 million in DC income tax. Initially, experts speculated that Saylor could face up to $75 million in penalties.
Saylor’s Resignation and Continued Influence
The tax fraud allegations led to Saylor stepping down as CEO of MicroStrategy in August 2022, a position he held for 33 years since founding the company. Despite resigning as CEO, Saylor transitioned to the role of executive chairman and maintained his position as chairman of the board. In this capacity, he continued to promote MicroStrategy’s Bitcoin-friendly image, frequently announcing new Bitcoin acquisitions on social media.
In March 2024, MicroStrategy made a significant Bitcoin purchase, acquiring 12,000 BTC through an $800 million convertible note offering. As of May 1, 2024, MicroStrategy owned 214,400 bitcoins, with an average purchase price of $35,000 per BTC, totaling approximately $7.5 billion.
Saylor’s Bitcoin Advocacy and Market Influence
Michael Saylor has become a prominent figure in the cryptocurrency community due to his substantial Bitcoin investments and active presence on social media. He is regularly invited to speak at industry conferences and events, sharing his insights and advocating for Bitcoin.
Saylor’s journey as a Bitcoin advocate began in 2020 when he announced on Twitter that he had purchased 17,732 BTC for $175 million. Before this, he was skeptical of Bitcoin. In December 2013, he expressed concerns about Bitcoin’s sustainability, suggesting it could be regulated out of existence due to the lack of a credible sponsor.
MicroStrategy’s commitment to Bitcoin has significantly influenced its market perception. The company’s strategic investments have solidified its position as a major player in the cryptocurrency space, with Saylor at the forefront of this transformation.
This $40 million settlement with the District of Columbia underscores the serious implications of tax evasion and highlights the importance of compliance with tax laws. As MicroStrategy and Saylor move forward, their focus remains on leveraging Bitcoin to drive innovation and growth in the technology sector.