Allyson Versprille
Crypto-mining companies are the latest target of Senate Finance Committee Chairman Ron Wyden’s probes into whether Opportunity Zones are driving investment and job creation in low-income communities as intended.
The Republican-led 2017 tax overhaul offers capital-gains tax breaks to investors who develop real estate or fund businesses in the thousands of census tracts that have been designated as Opportunity Zones -- incentives that are meant to spur investment in economically distressed areas. Wyden, a Democrat from Oregon, sent letters to Redivider Blockchain Opportunity Zone Fund LLC, Argo Blockchain, and HCVT LLP Monday, asking the companies to respond to a series of questions on the crypto-mining projects in Opportunity Zones that either they or their clients are currently invested in.
In the letters obtained by Bloomberg News, the senator said he’s “concerned by recent reports that companies involved in cryptocurrency mining may be seeking to avoid taxes without meaningfully benefiting distressed communities using the Opportunity Zone program.”
More than 6,000 funds invested about $29 billion in Opportunity Zones through 2019, according to Internal Revenue Service data cited in a November from the U.S. Government Accountability Office. Wyden previously introduced legislation to tighten the rules around Opportunity Zones and require more reporting to increase transparency.
The current lack of safeguards and transparency measures in the Opportunity Zone program “raise the possibility that taxpayers are simply subsidizing companies involved in cryptocurrency mining,” he said.
The probe follows a similar investigation into luxury real estate developments in Opportunity Zones, in which Wyden targeted Anthony Scaramucci’s hedge fund SkyBridge Capital, accounting firm Baker Tilly and others.
