Crypto hedge fund manager gets 37 months for U.S. tax evasion scheme

Justin Ryan Schmidt, a former U.S. citizen who managed a cryptocurrency-focused hedge fund, was sentenced to 37 months in federal prison, 3 years of supervised release and $3.4 million in restitution after a Justice Department case over unreported income, offshore accounts and false expatriation filings. Court records say Schmidt, formerly of Austin, Texas, earned at least $7 million between 2020 and 2022 but reported $5,000 or less on each U.S. tax return for those years, while also failing to disclose millions of dollars in foreign bank accounts to the IRS (U.S. tax authority). Prosecutors said he renounced his U.S. citizenship in March 2022, falsely listed his net worth at $25,000 despite it exceeding $2 million, and wrongly certified that he had complied with U.S. tax obligations during the previous five years. The case also covered a 2023 Snowmass Village, Colorado, home purchase for about $5.8 million and sale three months later for about $9 million, where prosecutors said he filed false documents to avoid tax withholding on U.S.-source income. Assistant Attorney General Colin M. McDonald said the sentence shows that renouncing citizenship does not put people beyond the reach of U.S. law. The case highlights continued U.S. enforcement against tax evasion tied to cryptocurrency investment income, even when individuals move overseas or expatriate.