Alternative currency pitched as way to avoid taxes could be behind PayPal’s decision to stop providing services to Epik.
After Domain Name Wire wrote about PayPal dropping Epik last week, Mashable writer Matt Binder confirmed with PayPal that the decision had nothing to do with Epik catering to fringe and far-right websites. A source told him the issue is with Epik’s Masterbucks.
Epik subsequently took down a blog post that contained several letters it sent in response to the controversy and removed the main page about Masterbucks on its website. The Masterbucks page was removed between yesterday and today, according to Google cache. A knowledge base article about Masterbucks remains online. [Update: the PayPal letters address works again. The URL for the Masterbucks page epik.com/services/masterbucks, which gave a 404 error earlier, now forwards to a website at Masterbucks.com.]
Given the controversy, it’s worth digging into the Masterbucks concept.
Epik pitched Masterbucks as a sort of alternative currency, but it’s essentially store credit. When Epik customers sell domains, they can receive the funds in Masterbucks. They can then use this store credit to register domains, acquire domains on the aftermarket, and use for other Epik services. They can also send “real” money to Epik to add to their Masterbucks account and withdraw Masterbucks into real currency.
Epik pitched Masterbucks as a tax-efficient way to buy and sell domain names. In a post on NamePros last year, Epik CEO Rob Monster wrote:
Proceeds can be held in the form of in-store-credit until redeemed. Redemption to cash is a taxable event, however trading domains for domains is a like-for-like exchange for which there should be no taxable event. Depending on your jurisdiction, you should consult with your tax advisor, but we have yet to see a challenge.
Monster pitched it as a 1031 exchange.
A 1031 exchange is a common tax move in the U.S. for real estate investors. It works like this: a real estate investor sells a property and has a capital gain. Rather than paying taxes on the capital gain, they can essentially roll that gain into the purchase of another property.
While the concept was previously used for things other than real estate, the Tax Cuts and Jobs Act passed in 2017 changed the law to say that 1031 exchanges could only be applied to real estate.
Monster pitched the 1031 exchange value of domain names after this change.
Applying 1031 exchange law to domain names could be a big tax advantage.
Epik customers in the U.S. who used Masterbucks to avoid paying taxes could be in trouble. In October 2018, Monster wrote on Domain Name Wire, “We have folks buying and selling daily, tax-free as 1031 transactions.”
Andrew Allemann says
What’s your point?
Eliminate competitor by refuse, ban
PP mass market share.. Political bias… Cancel culture and combination Monopolistic behavior. Paypal is a monopoly refusing its service to small company due to politics, amongst other things.
Guarantee if tax advantage never existed; complaining anything else.
This is “cancel culture” Andrew..
They are being bullies.
Shaun Pilfold says
Eliminate a competor? You really think PayPal considers Epik is a competitor? Political bias? You have no proof so it is just opinion.
I think you just made it.
Andrew Allemann says
I don’t see what PayPal working on something related to cryptocurrency has to do with Epik pitching 1031 exchanges using its own alternative currency.
Besides, applying the 1031 Exchange mechanism on domain name is illegal since the law has been changed. There are legal and tax implications involved here and I presume, PayPal does not wish to be exposed to such risk.
These comments from Dan’s pinned tweet tell an amazing story.
Dig deep my friends!
But that dastardly Epik is up to no good! Unlike PayPal, who has a strong stance against the dangers of money laundering, tax evasion, and financial risk. Like the kind that have long been known and prevalent within the cryptocurrency world.
Prediction: expect calls for the resignation of PayPal’s CEO within the week.
Only getting “Something went wrong.” at that link.
dan w says
Weren’t there similar claims with escrow services previously?
“Mashable writer Matt Binder confirmed with PayPal that the decision had nothing to do with Epik catering to fringe and far-right websites.”
I saw the Mashable piece myself the other day.
Whew, for a moment there I thought there could be something to be concerned about.
Well, since someone from Mashable has confirmed with PayPal the decision had nothing to do with political and cultural bias, and only pertains to concerns about Masterbucks, that settles it…
PS: I sure hope Matt Binder can also confirm it nothing to do with competitors agitating for adverse action too.
Lifesavings Online says
I’m a proponent of functional crypto for streamline services. That said, there needs to be strict KYC and IRS reporting in place. Otherwise you’re ASKING for trouble. This isn’t even a secret. Even the most shoddy projects employ KYC, KYC which is very detailed.
I even wrote an article how crypto and Epik specifically is facilitating the laundering of money this way. I wrote all about it almost a year ago…
A trend MORE alarming, of which Epik is spear-heading, is ALT-DNS domain names. Like for example, their .o TLD.
ALT-DNS + crypto run along the same lines: decentralize everything. Stomp out traditional money…and ICANN too?
Now, I have nothing against either of these (under circumstances)! However, it’s a slap in the face to ICANN, and even us (assuming I [we] have interest in the kind of domains we do). Right? Such circumstances! Epik promoting ALTERNATIVES isn’t REALLY helping *domainers*. It will NEVER help us, even if it becomes popular. In other words, working against us!
I don’t think I people should be subjected to ICANN alternatives extensions via ICANN accredited registrars! Isn’t that a little uhh, outrageous? A slap in the face? Or just me?
Seems Rob is looking out for Rob and not anyone else!
He acts like Icarus. And it’s not a new development to his character – he’s been so for some time. We’ll see where that leads him.
Some people might not know what KYC is. The U.S. Treasury requires banks and businesses to “Know Your Customer”. And, they are very serious about it. It is to prevent money laundering, illegal business activity and tax avoidance.
If ebay can have ebay bucks and other companies giving points for buying/selling, why can’t epik do that?
My BFA gives cash rewards…
“Bitcoin Prices Surge After PayPal Jumps into the Cryptocurrency Business
Currently at $13,000 per bitcoin. Take a moment and really reflect on what that means. The depth of gates, checks and barriers that would have to be popped to reach that state, especially given the insanity and real world activities behind some of crypto’s original founders and its co-creators. That is PayPal’s concept of fiscal responsibility. To help prop up and dive straight into an alternative form of currency, that even the AG’s Cyber-Digital Task Force is struggling to find anyway to regulate, due to the depth of criminal enterprises it is being used to sustain.
PayPal has become a $250 billion dollar company, by profiteering off PayPal users often already facing hardship, with excessive fees as they are welcomed to the monopolist’s club. The only cost of admission – destroy anything good or genuine that could be used to counter them, as they position their global monopoly to suck every last drop of vitality and liquidity from your friends and colleagues. Epik’s “rant” that this abuse often leads to hiding corruption of special interests, is a very valid one. I know it is far fetched that Hollywood and the elite could be prone to the sexual abuse of others. I am not sure what Davis was thinking when he sounded off that Epik has no tolerance for it. The very nerve.
Conflating conjecture and what-ifs against Epik, as you help re-write the narrative for damage control is bad form. It’s not even cognitive bias, it just deceptive journalism.
When the lightbulb finally goes off, and you see how PayPal’s long term strategy and Epik are actually related, let us know.
PayPal is very interested in including digital currencies and I also see the purchase of a company related to digital currency.
I see Paypal like that of a dictatorial regime.