Jailed Kickboxer Andrew Tate Promoted Bitcoin for Tax Avoidance in Video
The video of Andrew Tate, who was 2022's eighth-most Googled person, was published by popular YouTube personality and criminal lawyer Bruce Rivers earlier this month. But the strategy Tate touted for bitcoin tax avoidance would likely run afoul of the law in many jurisdictions.
It’s been all over the news that Andrew Tate, the embattled British-American social media influencer and five-time world kickboxing champion, was arrested in Bucharest, Romania, last month. He is currently sitting in jail with his younger brother and two business partners for alleged human trafficking, sexual assault and forming an organized criminal enterprise.
The video shows clips of a brazen Tate – the eighth-most googled person of 2022, according to Google Trends – boastfully admitting to multiple illegal acts, including fraud and tax evasion. The clips were collected and published as part of a legal analysis by popular YouTube personality and criminal lawyer Bruce Rivers.
In the clips, a grandiloquent Tate, clad in a turquoise sweater, proudly details how he used bitcoin to swindle unwitting sex workers and cheat the tax man.
One of Tate’s lawyers in the Romanian case, Eugen Vidineac, told CoinDesk that Tate is currently not facing any tax evasion charges.
“There is no allegation against him on tax evasion,” Vidineac told CoinDesk. “That's not on the list of charges.”
According to a British news site, the former kickboxer claims he made $600,000 monthly from a lucrative online webcam business that employed 75 sex workers globally. In the video posted by Rivers, Tate seems to describe how to use bitcoin to bypass the traditional banking system and evade taxes by taking advantage of Chaturbate – an adult webcam platform with an option for bitcoin payouts to performers.
“Another reason to use Chaturbate is because they will pay you in bitcoin,” Tate states in the video. “This is amazing because … trying to get money out of these sites into your bank without paying a [boatload] of tax is actually very difficult … Let's say you generate three, four thousand dollars. Bang! You get bitcoin into your wallet, done. No ... tax … none of that...”
It’s not clear if Tate was suggesting he believed bitcoin payments were not taxable, or that the largest cryptocurrency by market value was useful for avoiding taxation on income. “You're getting paid in bitcoin so you don't need to pay tax to anybody,” Tate said.
His comments point to an inescapable reality that global financial authorities have taken pains to emphasize – that while bitcoin might be one of the great technological innovations of our time, it’s not above the law. Income payments received in BTC are taxable in most jurisdictions.
According to current Internal Revenue Service guidelines, getting paid in bitcoin (BTC) or any other cryptocurrency generally constitutes employment income.
“He thinks just because it doesn't go through a bank it can't be traced and therefore, you can't tax it,” Rivers told CoinDesk in an interview. “But let's say I got 100 chickens for a fee that I didn't report. It was still income. So I’ve got to report that value. I’ve got to pay tax on those chickens.”
The IRS guidelines state that remuneration can be in various forms but it’s the fair market value of that remuneration that matters.
Of course, Tate may have been referring to activities outside of the U.S., but his dual British-American citizenship might still expose him to tax liability.
“What Andrew is trying to say is that crypto transactions are anonymous and the tax authorities will not be able to find them. Wrong on many counts,” Charles Kolstad told CoinDesk. Kolstad is an international tax lawyer at Withers Bergman LLP. “The IRS, the tax authorities in the [European Union] and elsewhere may be slow but they are not stupid. The tax authorities have blockchain analytic tracking software and will find you eventually. The IRS, the EU and members of the OECD are all focused on tax evasion through the use of crypto.”
Several online crypto sleuths claim to have identified bitcoin wallets belonging to Tate. One YouTuber recorded an exposé insisting he had found bitcoin and ether wallets for Tate’s “War Room” – an online membership program with a hefty $5,000 price tag.
Earlier this month, crypto news site Protos also claimed to have found one of Tate’s bitcoin wallets. Blockchain data shows the wallet currently has about 8 BTC, but has received over 114 BTC (roughly $2.6 million) since August 2021. Funds have been transferred out over time and the most recent withdrawal of roughly 6.5 BTC was made on Dec. 12, 2022.
According to Forbes, Tate has been living in Romania since 2017. One Romanian legal expert told CoinDesk that Romania doesn’t have laws that specifically address cryptocurrency.
“Romania is very far behind other countries” when it comes to the adoption of cryptocurrency and creating a legal framework for blockchain-based payments, Stefan Loredan told CoinDesk in an interview. Loredan is a Romanian lawyer and CEO of Onelink Solutions, a legal advisory firm. “We are so far behind. I think it will happen in the next 10, 15, 20 years. But as of now, there's no regulations and there's no laws which involve crypto.”
According to Loredan, who’s discussed Tate’s legal woes on several television news shows, the controversial influencer may not be in the clear just yet in terms of any legal exposure to tax evasion or money laundering.
“During the trial some charges can drop, but also other charges can be added,” Loredan explained. “For example, if after the prosecutor goes through his phone and there's further evidence, he might be subject to charges of money laundering or whatever else.”
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