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obtaining US residency and crypto without SoF

pftz

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Jan 22, 2025
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Hi everyone,

I’m considering moving to the US in the future, though I don’t currently have resident status there. I have savings in Bitcoin, for which there are no acquisition documents. These funds were accumulated through transfers from various exchanges back when KYC wasn’t required. The accounts on those exchanges have long been lost, and I don’t see the point or have the desire to recover them. After obtaining resident status, I plan to use this crypto at some point and want to stay fully compliant with the IRS. I'm going to declare it from the start, but the issue is the lack of documentation regarding the origin of the crypto.

From the information I’ve gathered so far, when declaring, I’ll only need to report the amount of crypto realized and the resulting profit. The cost basis would be considered the Bitcoin price on the day I obtain resident status.

It seems to me that the IRS won’t be interested in where I got the Bitcoin or the price I paid for it. Instead, they might only be concerned with the fact of ownership on the day I become a resident.

To confirm ownership, I plan to take the following steps before obtaining residency:
  1. Consolidate the cryptocurrency into a small number of wallets to make it easier to manage (in the next points).
  2. Create an account on a KYC-compliant exchange (e.g., Coinbase) and transfer a small amount of Bitcoin to link the wallet with this account.
  3. Make an OP_RETURN transaction with some information to semi-anonymously tag the wallet as mine — for example, “ownership confirmation, 5533,” where 5533 is a number from some official document or a number of a KYC-linked account. I understand this action shouldn’t compromise my anonymity.
  4. Notarize a statement declaring that I am the owner of the address bc1pani....akwozf, while partially obscuring the address to protect my anonymity.
This way, if needed, I can prove that I already owned this crypto before acquiring resident status, not someone else.

What are your thoughts? Would this approach work? What are the risks?
 
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What are your thoughts? Would this approach work? What are the risks?
They can empty your wallet once there is quantum computing available as you have disclosed your public key. Maybe better ensure you transfer all to one one-time use wallet. You can then use the private key to sign a message stating that you are the owner. You then print out the message and the signature and go to the city hall / notary and get a certified copy for $10, which bears the date. It should be pretty evident from my understanding.
 
Your plan will fail as soon as you hit the second step, they WILL freeze your money and ask for a source-of-crypto.

If you can't provide:
- Bank deposit slips showing deposits to other exchanges
- Purchase logs, trading history, withdrawal history at other exchanges
- Any other documents that show the origins of your crypto
Forget about trying to play this game.
You can easily find a solution to your problem by grabbing a Mentor Group Gold membership, I heard there's a crypto monster lurking in there who can help you.
 
Your plan will fail as soon as you hit the second step, they WILL freeze your money and ask for a source-of-crypto.

If you can't provide:

Forget about trying to play this game.
You can easily find a solution to your problem by grabbing a Mentor Group Gold membership, I heard there's a crypto monster lurking in there who can help you.
I plan to transfer a small amount to the exchange, say the equivalent of $50. Even if the exchange blocks the account in this situation, I’ll try again with another exchange.

I understand there are many ways to "legitimize" these funds. However, from my current understanding, this isn’t necessary - when you obtain residency, you essentially start with a clean slate.
 
They can empty your wallet once there is quantum computing available as you have disclosed your public key. Maybe better ensure you transfer all to one one-time use wallet. You can then use the private key to sign a message stating that you are the owner. You then print out the message and the signature and go to the city hall / notary and get a certified copy for $10, which bears the date. It should be pretty evident from my understanding.
There is still plenty of time before quantum computers can break it.
Great idea with the digital signature, thank you for the suggestion!
 
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I understand there are many ways to "legitimize" these funds. However, from my current understanding, this isn’t necessary
You are wrong, unfortunately. Re-read @rss 's posts. I second these.
BTW, US institutions are interested about your SOF: no SOF => funds can be frozen and confiscated (yes, it's a simplified version of the reality).
 
I understand there are many ways to "legitimize" these funds. However, from my current understanding, this isn’t necessary - when you obtain residency, you essentially start with a clean slate.
You are wrong, unfortunately. Re-read @rss 's posts. I second these.
I think there are two levels.

1. Legality in terms of tax
I think for that one, you are most like fine if you can prove ownership when you moved to the US and then pay the relevant taxes upon sale, emigration or death, whichever comes first.

Of course you still run the risk of the US reporting you to your current country where you may not have fulfilled your tax obligations.

2. Source of funds with banks
It is a bit like with @Kadinger here. If you cannot prove where your funds are from, we must assume that they originated from silk road, North Korea or anything else. Hence no any bank will want to touch them.

You can offramp with @JohnnyDoe. Then you have cash. But again the same problem that no bank wants to see it. You can just use it to pay for things.
 
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You can offramp with @JohnnyDoe. Then you have cash. But again the same problem that no bank wants to see it. You can just use it to pay for things.
Thank you for taking the time to answer all and any posts regarding everything and everyone and also on my behalf.
I am not an ATM though, and I have some knowledge of what banks like to see thu&¤#
 
You are wrong, unfortunately. Re-read @rss 's posts. I second these.
BTW, US institutions are interested about your SOF: no SOF => funds can be frozen and confiscated (yes, it's a simplified version of the reality).
Perhaps, I didn't explain the essence of my question clearly enough.

I'm concerned about interacting with government authorities, not banks. It's hard to believe that it’s as simple as just reporting in a tax declaration how much profit you made from selling crypto. After all, there’s no requirement to report how much crypto you actually own, only the realized portion and the resulting profit.

I understand how banks work, what difficulties arise with cashing out, and the many solutions available. My goal is not to move and immediately cash out all the crypto I have. I simply want to spend it gradually over the years while staying within the law.
 
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Your plan doesn't make any sense.
Why? It is not that bad in the US. There are many trains not to go there and many to go there. It is his decision. Maybe he is Mexican and needs to move quickly now.

His question was how to prove ownership at day X of bitcoins. It is legitimate to protect yourself from any IRS claims etc. and it does make sense to do this, just in case.

Thank you for taking the time to answer all and any posts regarding everything and everyone and also on my behalf.
You are welcome. I appreciate your support. I can truly recommend to off-ramp with you. Will keep supporting you in future.

I am not an ATM though, and I have some knowledge of what banks like to see thu&¤#
Yes. The paper from the ATM you took them out if more than about 50k. I normally recommend depositing 50k and then again. Take out 100k. Then deposit 100k at four different banks while showing the ATM receipt. Then transfer the funds into one account, take out 400k and keep going.

Now you know what all that retired people in HSBC Premier are doing. Wasn't allowed to record it on camera last time.
 
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In his post he clearly states "I plan to use this crypto at some point".
He should remain low profile and do nothing until he can figure out a way to explain how he obtained his coins in the first place.

Figure out what your end goal is FIRST, and then work your way back and do some proper planning.
There is absolutely no point why you should link your KYC'd exchange account to a bitcoin wallet "just to prove ownership", ownership of what??? Sudden wealth with no explanation????

If you had a stolen Rolex, would you actively try and prove ownership of that stolen Rolex in hopes that one day the whole stolen watch registry will burn down and there won't be any record of that watch being stolen?
Now replace "Rolex" with bitcoin and "watch registry" with blockchain.

If the answer is no, congrats, you have a brain.
 
In his post he clearly states "I plan to use this crypto at some point".
He should remain low profile and do nothing until he can figure out a way to explain how he obtained his coins in the first place.
Of course it makes sense to protect yourself from any IRS claim first. Having a proof of ownership of the bitcoins before moving to the US is actually a good idea. I gave him an advice how to do it without any bank involvement. Purely on blockchaing and with cryptographic methods. He can even get the certified copy apostilled and have a solid proof that those were his before he moved to the US. That why, IRS cannot claim that he stole them while in the US nor that he got paid in bitcoin while in the US illegally or mined them while in the US or anything.

I don't know if they were stolen previously. But apparently, he is not worried about that. He only asked how to prove that he owned them when immigrating. Why be so mean to this honourable gentleman?
Your plan doesn't make any sense.
We normally write:
I think your plan has some flaws. I would recommend you to use a proof that does not involve any KYC exchange.
It means that same but sounds much nicer. Why not give him a nice answer and remind him that banks / exchanges may not like to see his money?
 
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Perhaps, I didn't explain the essence of my question clearly enough.

I'm concerned about interacting with government authorities, not banks. It's hard to believe that it’s as simple as just reporting in a tax declaration how much profit you made from selling crypto. After all, there’s no requirement to report how much crypto you actually own, only the realized portion and the resulting profit.

I understand how banks work, what difficulties arise with cashing out, and the many solutions available. My goal is not to move and immediately cash out all the crypto I have. I simply want to spend it gradually over the years while staying within the law.
Signed message is fine to prove your control of keys and coins, "certified true copy" is fine to prove date. But in case IRS will have questions they will hardly bother with scanning notarized copy to convert to file to check signatures etc. You will manage it, but it will be difficult. You may want to find a lawyer who understands crypto a bit and would write a short document to the effect of "Mr John Smith appeared before me on 1 February 2025 and demonstrated his control over wallet bc1pani....akwozf which contains 100 BTC by means of digital signatures" etc, and put his signature. It would be much easier to understand for IRS I believe.
 
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In his post he clearly states "I plan to use this crypto at some point".
He should remain low profile and do nothing until he can figure out a way to explain how he obtained his coins in the first place.

Figure out what your end goal is FIRST, and then work your way back and do some proper planning.
There is absolutely no point why you should link your KYC'd exchange account to a bitcoin wallet "just to prove ownership", ownership of what??? Sudden wealth with no explanation????

If you had a stolen Rolex, would you actively try and prove ownership of that stolen Rolex in hopes that one day the whole stolen watch registry will burn down and there won't be any record of that watch being stolen?
Now replace "Rolex" with bitcoin and "watch registry" with blockchain.

If the answer is no, congrats, you have a brain.
How did you come to the conclusion that all my assets are in crypto? And why should I remain low-profile?

Why do you assume that just because there are no docs for crypto, it's stolen or obtained illegally? There are different countries, and in some of them, it’s dangerous to disclose too much info about yourself to the gov, for example, because such information often leaks into the hands of criminals (and the gov itself often acts as the criminal). Moreover, until you sell crypto, there’s no obligation to report it at all - that depends on the country.

Transferring a small amount to a KYC exchange does not prove my ownership of a sending bitcoin address unless I choose to prove it somewhere, and in my plan, that place is neither an exchange nor a bank.
 
I believe your basis would be the price when you acquired it. There are some lawyers' sites saying so but I don't see direct links to authority sites.
In this case he would have to sell and buy again shortly before the day he becomes tax resident in the US. Troublesome but would do the job to be in the safe side.
 
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