Texas investor sentenced to two years after hiding BTC gains from taxman
A Texas bitcoin (BTC) investor is facing two years in prison after becoming the first person in history to be criminally charged for failing to report capital gains earned from crypto.
According to a US Department of Justice (DoJ) report from December 12, Frank Richard Ahlgren III “falsely underreported the (realized) capital gains” earned from selling Bitcoin worth $3.7 million between 2017 and 2019.
The report detailed how Ahlgren was an early investor in BTC and made his first purchases as early as 2011. In 2015, he bought approximately 1,366 BTC using his Coinbase account and sold 640 coins two years later for a total of $3.7 million. He reportedly used the proceeds to buy a house.
When it came time for Ahlgren to prepare his 2017 tax return, he lied to his accountant by submitting a false summary of his gains and losses from the sale of his BTC.
Specifically, he claimed that he bought the crypto at higher prices than he actually did, allowing him to underreport the true size of his gains. He also concealed gains on BTC sold for a total of $650,000 in 2018 and 2019 by moving it through multiple wallets and using mixers.
The total tax loss from Ahlgren’s activity totaled more than $1 million.
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“Frank Ahlgren III earned millions buying and selling bitcoins,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.
He added, “But instead of paying the taxes he knew were due, he lied to his accountant about the extent of a large portion of his gains, and sought to conceal another chunk of his profits through sophisticated techniques designed to obscure his transactions on the bitcoin blockchain. That conduct today earned him a two-year sentence.”
“Ahlgren will serve time because he believed his cryptocurrency transactions were untraceable. This case demonstrates that no one is above the law,” said Acting Special Agent in Charge Lucy Tan of IRS-Criminal Investigation (IRS-CI)’s Houston Field Office.
“This case marks the first criminal tax evasion prosecution centered solely on cryptocurrency. As the prices for cryptocurrency are high, so is the temptation to not pay taxes on its sale. Avoid the temptation and avoid federal prison.”
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