By Jason Clenfield and
Pavel Alpeyev
Bloomberg News
Sunday, June 15, 2014
http://www.bloomberg.com/news/2014-06-15/-bit...s-rich-to-ta...
TOKYO -- He's known as Bitcoin Jesus in the world of cyber-currencies.
Though he can't promise you heaven, he is offering a haven: a condo in the
Caribbean that comes with a new passport and almost zero taxes.
Meet Roger Ver, ex-U.S. citizen, ex-convict, millionaire investor,
self-described libertarian, and founder of Passports for Bitcoin.com.
The ever-expanding universe of what you can buy with bitcoins includes a
hotel stay in Rome, a kimono in Tokyo, and cable TV in the United States.
Ver, a pioneer investor in bitcoin startups, now says he can add citizenship
to the list.
Specifically, that's the right to live in the Federation of St. Kitts and
Nevis, two sun-kissed islands a three-hour flight from Miami. St. Kitts has
run an invest-and-become-a-citizen program since 1984, making it the oldest
of its kind, says the country's website.
Plunk down $400,000 for real estate and you get a passport that allows
visa-free travel to 120 countries. There are no taxes on personal income or
capital gains and the islands' restrictive disclosure laws offer shelter from
outside scrutiny, according to the Tax Justice Network, a think tank that
studies secrecy jurisdictions.
Ver's website, in English, Russian, and Chinese, offers a way to purchase
a piece of that paradise with bitcoins. He says it will help people who are
hemmed in by government restrictions on cash transactions.
"I'm going to China next month to explain to people that bitcoin is
the easiest way to pay for things outside the country," Ver said during
a meeting this month at the plush 51st floor lounge of Tokyo's Roppongi
Hills.
A trim 35-year-old with a crew cut, in a black polo shirt and slacks, Ver
looked a little like an electronics salesman at a big-box retailer. Still, a
crowd of followers hung on his every word. A former derivatives trader at
Goldman Sachs Group Inc., a hacker, and a professional boxer were all there
to pitch ideas or talk bitcoin with the master.
Ver got rich investing in bitcoin early and has become a regular speaker
at industry conferences. He's provided seed funds for a dozen prominent
startups including Kraken, an exchange where people buy and sell the digital
currency, and Blockchain, an online wallet used to store it.
Bitcoin was invented in 2008 as a currency that could be used without
government oversight. That's drawn people who want to trade illicit goods
like drugs and guns. It's also gained support from libertarians like Peter
Thiel, the billionaire co-founder of PayPal who plans to build an artificial
island where people can do whatever they want. Ver's passport site, his
latest venture, is a scaled down version of that ideal.
Evade Taxes
"St. Kitts' government is much more libertarian compared with the
U.S.," Ver said. "It's not even close. So all these early bitcoin
adopters, of course if they have the means, they'd rather be a citizen of St.
Kitts."
However they pay to get in, people usually seek out countries like St.
Kitts so they can evade taxes, says John Christensen, director of the Tax
Justice Network. The U.S. Treasury Department last month said the island's
passports are being used to facilitate financial crime.
"To be blunt, we talk about places like St. Kitts as places where you
go to escape from responsibilities," Christensen, an expert on tax
havens, said by phone from London. "St. Kitts sells secrecy on the
international market and, unsurprisingly, attracts all types of dirty
money."
Erasmus Williams, press secretary for St. Kitts, didn't respond to phone
calls or e-mailed questions about the Citizenship-By-Investment program.
A woman who answered the phone at the Office of the Prime Minister said
the program is "not a matter of buying passports; it's about gaining
citizenship."
Nonetheless, no residency or visit is needed, just that $400,000
investment -- re-sellable after five years -- or a non-refundable $250,000
donation to the country, according to St. Kitts's official website.
For those who don't get the message the first time, the site repeats in
bold print: "No personal visit required."
Still, wealthy Chinese have a tough time buying in because government
limits on money transfers stop them from sending more than $50,000 worth of
cash overseas each year.
"The processing agent in St. Kitts told me he feels bad for all of
his Chinese clients," Ver said. "They have to reach out to all
different friends and relatives and get them to all send the money in drips
and drabs. Bitcoin solves all of that."
Anonymous Ledger
That's because it was designed to be anonymous. While an online public
ledger stores every single Bitcoin transaction, the entries don't include the
names and addresses required for bank accounts.
In practical terms, a person in Beijing can buy bitcoins at home through
BTC China, OKCoin or numerous other exchanges. With a few swipes on a
smartphone, the money can then be beamed to St. Kitts with no government on
Earth the wiser.
The U.S. lost its allure for Ver after he was sentenced to 10 months in
federal prison after selling about 14 pounds of explosive without a license
on the EBay auction site. The product, "Pest Control Report 2000,"
was basically a firecracker to scare birds away from cornfields, Ver says.
"I didn't do anything wrong. I didn't hurt anybody. I had nothing but
happy customers and the U.S. government locked me in a cage because of
that," he said. "So I want nothing to do with those people. I don't
want to support them. I want them out of my life."
Ver moved to Tokyo after finishing probation in 2006. He got his St. Kitts
passport on Feb. 13, 2014, and abandoned his U.S. citizenship by the end of
the month.
"I would have done it the same day if I could," he said.
"They told me I had to have a one-week cooling-off period. They said,
‘Did you know if you renounce citizenship, you won't be able to serve in the
armed forces?' It was like, 'darn.'"
Although Ver's computer parts business made him a millionaire by the time
he was 25, the real money came after he bought tens of thousands of bitcoins
in 2011. They cost about $1 each then. Today they trade at about $608,
according to the CoinDesk price index.
Ver said he earned his moniker, Bitcoin Jesus, by telling anyone who would
listen about bitcoin well before other venture capital companies paid any
attention to the digital currency.
One of the people who got a dose of Ver's sermons was the agent who
processed his application for citizenship, Paul Bilzerian. Bilzerian is a
former corporate raider who moved to St. Kitts after long battles with the
U.S. Securities and Exchange Commission and two stints in prison for
securities fraud and conspiracy to defraud the government of millions.
The two men bonded over the belief they'd been targeted by U.S.
authorities, according to Ver. Together, they started passportsforbitcoin.com
in April, Ver said.
Bilzerian, who is one of several-dozen licensed government processers in
St. Kitts, declined to comment in an e-mail.
Their website says a second passport insulates you from governments that
intrude on citizen's lives. The site also has testimonials from Ver and
Bilzerian's son, Dan, a 30-something professional poker player with millions
of followers on Instagram, where he posts pictures of himself with half-naked
women, along with his gun collection. He didn't respond to e-mailed questions
forwarded through his press agent.
"I value freedom more than almost anything else and a second or third
passport provides me insurance just in case the U.S. government decides to
value security over freedom," Bilzerian's son writes on the passport
website.
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