Washington, D.C. Attorney General Brian Schwalb announced a landmark $40 million tax fraud recovery settlement with Michael Saylor and his company, MicroStrategy, according to a June 3 press release.

Schwalb stated:

“Michael Saylor – billionaire tech executive and investor – will pay $40 million to the District in the largest income tax fraud recovery in DC history. Saylor not only broke the law, but also openly bragged about his tax evasion scheme and encouraged others to follow his example.”

Despite the settlement, Saylor and MicroStrategy have denied any wrongdoing, stating that the agreement was made to avoid further legal complications and reduce litigation burdens.

Saylor is a vocal advocate of Bitcoin, and MicroStrategy holds over 200,000 BTC, valued at around $14 billion.

Tax Fraud Allegations

The settlement stems from accusations that Saylor evaded over $25 million in income taxes while living in Washington, D.C. The attorney general’s office alleged that Saylor and MicroStrategy submitted fraudulent tax documents between 2005 and 2021, falsely reporting his residence in Virginia or Florida, which have lower income tax rates.

Schwalb claimed that Saylor actually resided “in a 7,000 square foot Georgetown penthouse and docked multiple yachts at Washington Harbour,” further asserting:

“Saylor illegally pretended to live in lower-tax jurisdictions to avoid paying taxes on hundreds of millions of dollars of income – all while living in a 7,000 square foot Georgetown penthouse and docking multiple yachts at Washington Harbour.”

MicroStrategy Shares Rise

The settlement has not negatively impacted MicroStrategy’s shares. According to Yahoo Finance, MSTR’s shares rose by about 7% on the day, trading at $1,615 as of press time. This continues a positive trend for the BTC-related stock, which has risen by 133% year-to-date.

Notably, the company’s stock was recently added to the MSCI World Index, with BlackRock—the world’s largest asset management firm—acquiring 4,020 shares of MSTR, valued at approximately $6.1 million.