Frank Ahlgren III, a resident of Texas, USA, was sentenced to two years in prison and ordered to pay $1.09 million in damages for failing to accurately report his Bitcoin trading income, leading to a government tax loss of over $550,000. Additionally, the court ordered him to surrender Bitcoin private keys and related storage devices worth over $124 million. (Background: Bitcoin Jesus Roger Ver is accused of tax evasion and fraud with a maximum penalty of 109 years, supporters petition for a pardon) (Context: Japan's National Tax Agency: Surge in cryptocurrency tax evasion cases! Unreported income exceeding $120 million in fiscal year 2022) If cryptocurrency trading involves tax evasion or false reporting of income, it may lead to serious legal consequences in the United States. Recently, a resident of Texas was sentenced to two years in prison for underreporting Bitcoin trading income, and was required to surrender Bitcoin private keys valued at over $124 million, attracting widespread attention. $4 million Bitcoin transaction not accurately reported The defendant is Texas resident Frank Richard Ahlgren III. According to court documents, he underreported or failed to report approximately $4 million worth of Bitcoin sales from 2017 to 2019, resulting in a government tax loss of over $550,000. The specifics are as follows: Bitcoin sales in 2017: Ahlgren sold about 640 Bitcoins in 2017, purchased for less than $500 each in 2015, totaling approximately $3.7 million (the price of Bitcoin at the time was around $5,807.53 each). However, he exaggerated the purchase cost, leading to significantly underreported taxable capital gains. Bitcoin sales in 2018-2019: Ahlgren sold Bitcoins worth over $650,000 during these two years. However, he did not report these transactions at all in his tax filings for those years. Furthermore, Ahlgren employed various methods to conceal his trading profits, including spreading Bitcoins across multiple wallets, conducting face-to-face exchanges of Bitcoin for cash, and using mixing services to obscure the identity of the transaction initiator. On September 12 of last year, Ahlgren admitted to the charges and was sentenced three months later. Ultimately, he was sentenced to two years in prison, followed by one year of supervised release, and ordered to pay $1,095,031 to the U.S. government. Judge orders surrender of private keys Today, according to Bloomberg, Judge Robert Pitman ruled on Monday that Ahlgren must surrender the private keys and related equipment containing cryptocurrency assets and disclose all cryptocurrency accounts. Additionally, the court prohibits him from transferring or selling any property without approval but allows normal living expenses. Reports further indicate that Ahlgren used mixing services in 2020 to hide at least 1,287 Bitcoins, which are currently worth over $124 million. The prosecutors emphasized in their request that Ahlgren's virtual currency assets cannot be seized through conventional physical means, therefore the government demands: "The court not only orders the freezing of these virtual currencies but also demands the acquisition of private keys to ensure the assets are not transferred by others. Once the private keys are lost or destroyed, these virtual currencies cannot be recovered." This case is the first conviction in the United States for tax evasion related to cryptocurrency trading, indicating the increasing importance the U.S. government places on cryptocurrency tax compliance. This case also serves as a warning to cryptocurrency holders that hiding assets or underreporting income is illegal and may result in severe consequences such as imprisonment and asset forfeiture. This case may become a typical example of future cryptocurrency tax enforcement, especially involving the use of mixing services.

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