Even the Mysterious Must Face the Taxman: Australian Authorities Raid Home of Suspected Founder of Bitcoin
By Tim McCormack
On December 9, police in Australia raided the home of a man suspected of being the elusive and previously anonymous creator of digital currency Bitcoin. Launched in 2009 by an anonymous programmer known by the pseudonym Satoshi Nakamoto, Bitcoin has since grown exponentially. Indeed, “[a]s it’s been adopted for everything from international money transfers to online narcotrafficking, the total value of all bitcoins has grown to nearly $5 billion.” Wired.
The raid came hours after Wired magazine reported that Satoshi Nakamoto was actually Australian academic Craig Steven Wright. Although the Australian authorities have given little detail about the reason for the raid, there are indications in both the Wired article and subsequent news reports that it relates to potential tax evasion charges. Nakamoto / Wright is alleged to own 1 million or more Bitcoin, worth approximately $400 million USD.
Perhaps it is not surprising that someone who anonymously creates a currency that operates outside traditional government-run structures might seek to shield some or all of the income taxes charged by the old school, bricks and mortar governments. However, the fact that a currency is “virtual” does not mean it is not real. Bitcoin can be used to buy real world goods and services from businesses ranging from local coffee shops to large corporations like Microsoft, Dell, and Overstock.com. Assets are assets, and taxes are taxes, and a failure to properly report the former can very well lead to prosecution for failing to pay the latter even in the new world of virtual currency.