His case marks the first criminal tax evasion prosecution in the U.S. focused solely on crypto.
Ahlgren started investing in Bitcoin in 2011 and bought 1,366 BTC in 2015 when Bitcoin was trading for less than $500. Let’s discover more about this news about crypto gains.
Bitcoin Investor Hid Millions in Unreported Taxes
By 2017, the value of Bitcoin had skyrocketed. He sold 640 BTC for $3.7 million, using the money to invest in real estate. But there was one big problem—he didn’t report most of the crypto gains on his taxes.
The Department of Justice (DOJ) revealed that Ahlgren filed a false tax return in 2017. He inflated the cost of the Bitcoin he bought. He made his profits look much smaller than they were. He also failed to report over $650,000 in Bitcoin sales for 2018 and 2019.
In a major first for crypto regulation, Frank Richard Ahlgren III, a Texas Bitcoin investor, has been sentenced to two years in prison for underreporting millions in gains.
Between 2017-2019, Ahlgren sold $4 million worth of Bitcoin, but tried to hide his profits from the… pic.twitter.com/gb3f9YMuqz
— Benzinga (@Benzinga) December 13, 2024
Trying to Cover His Tracks
Authorities say Ahlgren tried to hide his tracks. He moved funds through multiple crypto wallets, used mixers to make transactions harder to trace, and even made some in-person cash deals. Back in 2014, Ahlgren wrote a blog post about using mixers to keep Bitcoin transactions private, showing he knew exactly what he was doing.
NEW: Frank Ahlgren, an early Bitcoin investor from Austin, Texas, has been sentenced to 2 years in prison for tax fraud. According to the DOJ, Ahlgren falsely reported capital gains from selling 640 Bitcoin valued at $3.7 million between 2017 and 2019, using methods such as… pic.twitter.com/NHkNklIdxT
— Bitcoin News (@BitcoinNewsCom) December 14, 2024
Despite his efforts, the IRS was able to follow the trail. Acting Deputy Assistant Attorney General Stuart Goldberg said Ahlgren’s actions led to over $1 million in unpaid taxes. “He will serve time because he believed his cryptocurrency transactions were untraceable,” said Lucy Tan, Acting Special Agent in Charge of the IRS’s Criminal Investigation Houston Field Office.
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