A US Senate committee is examining whether Dan Morehead, founder of Pantera Capital, attempted to bypass federal tax obligations by relocating to Puerto Rico. This inquiry follows concerns regarding substantial investment profits that may not have been properly taxed.

According to a report from the New York Times, Senator Ron Wyden, a Democrat from Oregon and previously the Senate Finance Committee chair, sent a letter on January 9 requesting information on Morehead’s financial activities. 

The committee is scrutinizing whether Morehead and other affluent individuals used Puerto Rico’s Act 60 tax incentives to shelter income that should have been subject to U.S. taxation.

"In most cases, the majority of the gain is actually US source income, reportable on U.S. tax returns, and subject to U.S. tax," Wyden stated in his letter.

Morehead, who leads Pantera Capital—one of the foremost cryptocurrency investment firms—stated that he relocated to Puerto Rico in 2021 and asserts that he has adhered to tax regulations. However, the Senate’s inquiry questions whether he misapplied the tax exemption on an estimated $850 million in capital gains.

Puerto Rico’s Act 60 was designed to attract investors by allowing them to pay little or no tax on capital gains earned within the territory. This has drawn significant interest from high-net-worth individuals, particularly in the tech and cryptocurrency industries.

However, US authorities, including the IRS and the Department of Justice, have been investigating potential misuse of these provisions. The IRS has identified around 100 cases where individuals may have engaged in tax evasion.

Morehead, who previously worked at Goldman Sachs, founded Pantera Capital in the early 2000s. Under his leadership, the firm has invested in major cryptocurrency entities such as Circle, Ripple, and Coinbase. 

The letter from Wyden indicates that following Morehead’s relocation to Puerto Rico, Pantera Capital liquidated a substantial portion of its holdings, yielding over $1 billion in capital gains. Morehead's personal earnings from these transactions reportedly exceeded $850 million.

Wyden’s letter also seeks details on Morehead’s tax advisors and a list of assets he sold while residing in Puerto Rico, including any cryptocurrency holdings.

The continuation of this investigation is uncertain, as the Republican Party gained control of the Senate last month. While Democratic lawmakers and the Biden administration have taken a firm stance on tax compliance within the cryptocurrency industry, Republican leaders—including former President Donald Trump—have shown greater leniency and support for the sector.

A spokesperson for Wyden confirmed that the investigation is ongoing but declined to provide further specifics. The office of Senator Michael Crapo, the new Finance Committee chairman, has yet to comment on whether the inquiry will persist under his leadership.

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