Translunar Crypto Co-Founder Gets 37 Months for Tax Evasion

A federal judge in Austin, Texas, sentenced Justin Ryan Schmidt, 46, to 37 months in prison after he pleaded guilty earlier this year to a scheme to evade U.S. taxes tied to his renunciation of citizenship and move to the Cayman Islands.

Prosecutors allege Schmidt underreported his income for the 2020, 2021 and 2022 tax years, reporting earnings of less than $5,000 while his hedge fund generated more than $7 million between 2019 and 2022. Court documents state he renounced U.S. citizenship in March 2022 and submitted a false declaration of net worth during the expatriation process to reduce tax obligations.

Authorities also say Schmidt concealed taxable gains from a real estate transaction in 2023. He bought a home in Snowmass Village, Colorado, for $5.8 million and sold it three months later for $9 million; prosecutors contend he provided false paperwork to avoid taxes on the profit.

Schmidt co-founded Translunar Crypto LP in 2017 and raised capital primarily from investors in Austin, Texas, and Aspen, Colorado, to invest in blockchain and digital-asset businesses.

He has been in custody since his arrest by IRS Criminal Investigation agents in February. Federal filings submitted before sentencing allege Schmidt misrepresented his finances after the arrest, initially telling probation officers he was single and had a negative net worth of about $1.1 million, then acknowledging he is married to a British citizen living in the Cayman Islands and has a net worth of at least $5.8 million.

U.S. District Judge Robert Pitman also ordered Schmidt to pay approximately $3.4 million in restitution. The Department of Justice noted, “renouncing U.S. citizenship does not exempt former citizens from U.S. tax laws or criminal prosecution where offenses have been committed.”