The U.S. Attorney’s Office and the Internal Revenue Service (IRS) are investigating cryptocurrency traders and fund managers who are suspected of illegally obtaining tax breaks on the island of Puerto Rico.

Investigators have opened several civil and criminal cases against hedge fund managers, cryptocurrency traders and other wealthy Americans. The IRS suggests that they may have lied about their Puerto Rico residence and income in order to take advantage of tax breaks. Prosecutors are also pursuing allegations of conspiracy and wire fraud in cooperation with Puerto Rican officials.

In 2012, the government of the island updated its tax policy, after which residents were completely exempt from taxes on interest, dividends and capital gains. In addition, residents of this jurisdiction are 60% exempt from municipal taxes and pay only 4% export tax. To reduce the fiscal burden, some American companies have moved to Puerto Rico in order to keep as much profit as possible without losing their US citizenship. To qualify for benefits, new residents must prove they live on the island for at least 183 days a year.

However, some US lawyers familiar with the law argue that people may misrepresent information on their tax returns. In addition, Puerto Rico’s tax program provoked protests from local residents who called wealthy Americans “low-tax colonizers” who raise the cost of living.

Gold investment advocate and bitcoin critic Peter Schiff is one of those who have chosen the jurisdiction of Puerto Rico for tax reasons. However, last year local regulators suspended his bank, Euro Pacific, for failing to meet minimum capital requirements. In this regard, Schiff was ready to sell his bank for bitcoins.