A Bitcoin investor in Texas has been ordered to surrender all cryptocurrency after being sentenced to 2 years in prison for tax fraud exceeding $1.1 million from a $3.7 million transaction.
Frank Richard Ahlgren III, a veteran Bitcoin investor from Texas, faced a complete seizure of his cryptocurrency assets after being sentenced to two years in prison in December for tax fraud. The case marks a significant turning point, becoming the first criminal prosecution in the U.S. entirely related to cryptocurrency tax evasion.
On January 6, Federal Judge Robert Pitman of the Austin District Court ordered Ahlgren, along with his family members, friends, and legal representatives, to surrender all cryptocurrency storage devices, including public keys, private keys, recovery phrases, and wallet passwords.
This order applies to all types of cryptocurrency that Ahlgren owns, including Bitcoin, Bitcoin Cash, Bitcoin Gold, Ether, and Litecoin. The court also requires the disclosure of all accounts related to these cryptocurrencies.
Frank Richard Ahlgren III and any associates have been ordered to surrender all physical devices, keys or access codes to their cryptocurrency. Source: PACER From million-dollar profits to prison time
Ahlgren admitted to falsely reporting capital gains from the sale of Bitcoin during the period from 2017 to 2019. Specifically, in 2015, when the price of Bitcoin peaked at $465, Ahlgren purchased 1,366 Bitcoin through the Coinbase exchange. Two years later, when the price of Bitcoin rose to $5,800, he sold about half of this Bitcoin, netting $3.7 million. However, Ahlgren 'significantly inflated' the basis value of Bitcoin on his 2017 tax return, thereby substantially minimizing the amount of capital gains he had to report and pay taxes on.
Not stopping there, from 2018 to 2019, Ahlgren continued to sell Bitcoin worth over $650,000 but completely failed to report these transactions on his tax return. According to prosecutors, Ahlgren used multiple different cryptocurrency wallets, conducted direct transfers, and utilized 'mixer' tools to obscure transaction details, in an effort to evade tax obligations. The total tax loss due to Ahlgren's fraudulent actions is estimated to exceed $1.1 million.
The prohibition on Ahlgren's cryptocurrency assets will remain in effect until he fulfills the restitution obligations as ordered by the court or until a new order is issued. In addition to a 24-month prison sentence, Ahlgren will also serve an additional year of supervised release after completing his prison term.
According to Lucy Tan, Acting Special Agent in Charge of the IRS Criminal Investigation Division in Houston, this case marks a significant turning point in law enforcement related to cryptocurrency, sending a strong message that authorities are increasingly intensifying oversight and addressing tax evasion in this area.
