MicroStrategy and co-founder to pay $40M to settle tax fraud lawsuit

MicroStrategy Inc. and its co-founder and chairman Michael Saylor will pay $40 million to resolve a tax fraud lawsuit.

The Washington, D.C., attorney general's office sued Saylor in August 2022, alleging the crypto billionaire had failed to pay more than $25 million in income taxes. The lawsuit alleged that Saylor had knowingly avoided paying taxes despite living in Washington for more than a decade. At the time, Saylor denied the allegations, saying that he lived in Florida.

"This precedent-setting settlement makes clear that no one in the District of Columbia, no matter how wealthy or powerful they may be, is above the law," DC Attorney General Brian L. Schwalb said in an emailed statement. It's "the largest income tax recovery in District history," according to the release.

Eva Marie Uzcategui/Bloomberg

Neither Saylor nor the Tysons Corner, Virginia-based firm admitted to any wrongdoing, according to a MicroStrategy filing.

"This was a personal tax matter involving Mr. Saylor. MicroStrategy was not responsible for his day-to-day affairs and did not oversee his individual tax responsibilities," a MicroStrategy spokesperson said, clarifying that the firm will not contribute to the settlement. Saylor will pay the settlement amount in full, according to the company filing.

Saylor "openly bragged" about his alleged Washington tax evasion, Schwalb said in the statement, and encouraged friends to do the same. Saylor, a Bitcoin enthusiast, has benefited from the cryptocurrency's recent resurgence in value.