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An Austin, Texas, man, Frank Richard Ahlgren III, has been sentenced to two years in prison for filing false tax returns that failed to report capital gains from the sale of $3.7 million worth of bitcoin, the department said. of Justice of the United States (DOJ). <a target="_blank" href="https://www.justice.gov/opa/pr/early-bitcoin-investor-sentenced-filing-tax-returns-falsely-reported-his-cryptocurrency”>announced today.
According to the Department of Justice, Ahlgren was one of the first bitcoin investors who began purchasing bitcoins in 2011. In 2015, he acquired 1,366 bitcoins through his Coinbase account, a year in which the price of bitcoin peaked at approximately 495 dollars per coin. By October 2017, bitcoin's value had increased and Ahlgren sold 640 bitcoins for $5,807 each, totaling a profit of $3.7 million. He then used the profits to buy a house in Park City, Utah.
However, when filing his 2017 tax return, Ahlgren misrepresented earnings by inflating the cost basis of his bitcoin purchases, claiming he had acquired the coins at above-market prices. This misstatement significantly reduced the reported capital gains.
Between 2018 and 2019, Ahlgren sold additional bitcoins worth more than $650,000, but did not fully report these transactions on his tax returns. In an attempt to hide his profits, he transferred funds through multiple wallets, exchanged bitcoins for cash in person, and used mixers to anonymize his bitcoin transactions.
In total, the Department of Justice stated that Ahlgren's actions resulted in a tax loss of more than $1 million.
“Frank Ahlgren III made millions buying and selling bitcoins,” said Acting Assistant Attorney General Stuart M. Goldberg of the Justice Department's Tax Division. “But instead of paying the taxes he knew he owed, he lied to his accountant about the extent of a large portion of his earnings and attempted to hide another portion of his earnings using sophisticated techniques designed to conceal his transactions on the bitcoin blockchain. “That behavior today earned him a two-year sentence.”
U.S. District Court Judge Robert Pitman sentenced Ahlgren to two years in prison, followed by one year of supervised release. Additionally, Ahlgren was ordered to pay $1,095,031 in restitution to the United States government.
“Ahlgren will serve time because he believed his cryptocurrency transactions were untraceable. This case shows that no one is above the law. “My IRS Criminal Investigation team has the experience and tools to track financial activity, whether it involves dollars, pesos or cryptocurrencies,” said Acting Special Agent in Charge Lucy Tan of the Houston Field Office of Investigation. IRS Criminal (IRS-CI). . “This case marks the first criminal prosecution for tax evasion focused solely on cryptocurrencies. As cryptocurrency prices are high, so is the temptation to not pay taxes on their sale. Avoid temptation and avoid federal prison.”
