Sen. Wyden questions Pantera founder on Puerto Rico tax breaks
U.S. Sen. Ron Wyden, the top Democrat on the Senate Finance Committee, alleges that Dan Morehead, founder of Pantera Capital, misused Puerto Rico’s Act 60 incentives program to avoid more than $100 million in U.S. capital gains taxes. Pantera is a cryptocurrency hedge fund with about $5 billion under management, according to Bloomberg Tax.
In a letter, Wyden asked Morehead for information about his advisers, assets sold and any legal opinions he obtained on the treatment of gains after relocating to Puerto Rico in 2022. He tied the case to ongoing Internal Revenue Service and Justice Department investigations into Puerto Rico’s residency-based tax incentives, which he said have been misused.
Wyden said committee staff obtained records showing that shortly after Morehead established Puerto Rico residency, Pantera sold a large position generating more than $1 billion in profits.
According to Wyden, Morehead treated hundreds of millions of those profits as exempt from U.S. taxes even though “the lion’s share of these gains accrued while you still resided in California.”
Crypto outlets have reported that Morehead’s post-relocation profits could total as much as $850 million, underscoring the scale of the potential tax dispute, according to those reports.
Morehead has not been accused of a crime, and neither the IRS nor the Department of Justice has announced charges against him.
The senator also pointed to Miami attorney Jeffrey Rubinger, who allegedly gave Morehead tax advice similar to that provided to investor Suresh Gajwani, who pleaded guilty in June to tax fraud tied to $30 million in gains linked to Act 60.
Wyden said federal prosecutors in South Florida are investigating lawyers who issued opinions that improperly advised clients to treat U.S.-source income as Puerto Rico-source.
The IRS has been stepping up enforcement in this area. In December 2024, the agency issued a Chief Counsel memorandum clarifying when securities gains can be treated as Puerto Rico-source for new residents. Tax experts say those rules make it harder to classify profits accrued before moving as Puerto Rico income.
The senator asked Morehead to respond by Oct. 15 with a list of his professional advisers, assets sold while residing in Puerto Rico, the amounts claimed as exempt Puerto Rico-source income and any tax opinions obtained from Rubinger or the law firm Baker McKenzie.
“These are serious allegations of potential abuse of Puerto Rico tax incentives to avoid the payment of U.S. taxes that you must immediately address,” Wyden wrote.
