Texas resident Frank Richard Algren III was sentenced to two years in prison for filing false tax returns.
Tax returns showed capital gains he made from selling $3.7 million worth of Bitcoin.
Cryptocurrency profits fraud case
Records reveal that Algren, an early Bitcoin investor, filed fraudulent tax returns between 2017 and 2019. Those returns understated or completely omitted the proceeds from a $4 million Bitcoin sale.
In the United States, federal cryptocurrency tax law requires taxpayers to disclose all cryptocurrency sales, including gains or losses, on their annual returns.
“This ruling marks the first criminal tax evasion trial in the United States focused solely on cryptocurrencies. This case highlights the IRS’s ability to track and prosecute crypto-related tax evasion,” wrote popular influencer Wadi on X (formerly known as Twitter).
According to reports, Algren began investing in Bitcoin as early as 2011. By 2015, he had acquired around 1,366 BTC via Coinbase. The market peak price for BTC that year was around $495 per BTC.
In October 2017, he sold 640 bitcoins for $3.7 million at an average price of $5,808 per token. He used the proceeds to buy a house in Utah.
However, Algren provided false information to mislead his accountant while preparing his 2017 tax return. He inflated his bitcoin purchase prices to claim small gains. His fabricated figures even exceeded the market price of bitcoin at the time.
In subsequent years, Algren sold an additional $650,000 worth of bitcoin without reporting these transactions on his 2018 and 2019 tax returns.
To hide his activity, he moved funds across multiple digital wallets, conducted personal cash exchanges, and used cryptocurrency mixers to hide transaction details on the blockchain.
crypto taxation around the world
Cryptocurrency Taxes Remain a Growing Concern
Ahlgren’s case reflects the growing scrutiny surrounding cryptocurrency taxes in the United States. Prominent figures like Roger Ver, known as “Bitcoin Jesus,” are also facing serious tax charges.
The federal government accuses Ver of evading $48 million in taxes related to the sale of $240 million worth of cryptocurrencies and a tax obligation related to his renunciation of U.S. citizenship in 2014. U.S. prosecutors are seeking Ver's extradition, and he is currently awaiting a court decision in Spain.
While the US tightens its grip on crypto taxes, other countries are easing restrictions. The Czech Republic recently announced plans to eliminate capital gains taxes on cryptocurrencies held for more than three years. Transactions under $4,200 per year will not require reporting.
In Russia, cryptocurrencies are now classified as property under updated tax legislation. Cryptocurrency transactions are exempt from value-added tax (VAT), and profits will be taxed along with securities income. Personal income tax on cryptocurrency-related profits is set at 15%.
These developments highlight a divergent approach to cryptocurrency taxation around the world as countries balance regulatory oversight with fostering innovation in the blockchain economy.
