Dan Morehead Faces Scrutiny Over Puerto Rico Tax Exemptions

Dan Morehead, founder and managing partner of cryptocurrency investment firm Pantera Capital, is reportedly under investigation for potential violations of federal tax laws following his relocation to Puerto Rico, a well-known tax haven.

The US Senate Finance Committee (SFC) has requested details on more than $850 million in investment profits Morehead allegedly earned after moving to Puerto Rico in 2020. According to a letter dated 9 January from Senator Ron Wyden, seen by The New York Times, Morehead “may have treated” these profits as exempt from US taxation.

Tax Exemptions Under Investigation

The SFC is investigating whether wealthy individuals who have relocated to Puerto Rico improperly applied tax breaks to avoid paying taxes on income earned outside the island. The letter reportedly states: “In most cases, the majority of the gain is actually U.S. source income, reportable on U.S. tax returns, and subject to U.S. tax.”

In response, Morehead defended his actions, stating, “I believe I acted appropriately with respect to my taxes,” and confirming that he moved to Puerto Rico in 2021.

Pantera Capital, which Morehead founded, was the first cryptocurrency investment fund in the US and has seen its early investments appreciate by over 130,000%, according to a blog post he wrote on 26 November 2024.

Morehead launched the Pantera Bitcoin Fund in July 2013, achieving a lifetime return of over 1,000 times on its first Bitcoin purchase at $74. He also noted that at the time, only 1% of financial wealth had been exposed to Bitcoin.

Pantera Capital currently manages over $5 billion in assets, with more than 100 venture investments and approximately 47% of its capital allocated outside the United States, according to the company’s official website.

Global Regulatory Focus on Cryptocurrency Taxes

The investigation into Morehead comes amid increasing regulatory scrutiny of cryptocurrency taxation. In June 2024, the US Internal Revenue Service (IRS) introduced a rule requiring third-party tax reporting for US crypto transactions for the first time.

Starting in 2025, centralised cryptocurrency exchanges (CEXs) and other brokers will be required to report sales and exchanges of digital assets, including cryptocurrencies, to the IRS.

This decision has raised concerns that investors may shift towards decentralised platforms, making tax revenue more difficult to track. Blockchain expert and author Anndy Lian warned of a “paradoxical situation” where stricter reporting could drive more users towards non-compliant services.

The crypto industry has strongly opposed these regulations. In December 2024, the Blockchain Association filed a lawsuit against the IRS, arguing that the new rules are unconstitutional. The lawsuit challenges the inclusion of decentralised exchanges under the “broker” classification, which extends data collection requirements to them.

As regulatory scrutiny on crypto tax practices intensifies, Morehead’s case may set a precedent for how authorities address tax compliance among high-profile crypto investors.