An early Bitcoin investor in Texas, Frank Richard Ahlgren III, was ordered to surrender his cryptocurrency holdings and access keys as part of his sentencing for tax fraud. Ahlgren, who was convicted in December 2024, faces a two-year prison term for underreporting over $3.7 million in Bitcoin sales between 2017 and 2019. The IRS has estimated that Ahlgren owes approximately $1.1 million in restitution to the U.S. government.
Austin Federal Court Judge Robert Pitman issued a restraining order that mandates Ahlgren and his associates to provide access to all crypto-related devices, private keys, and wallet information. The court has prohibited any transfer or concealment of Ahlgren’s Bitcoin, Bitcoin Cash, Bitcoin Gold, Ether, or Litecoin unless it pertains to “normal monthly living expenses” and requires prior court approval. This order will remain in effect until Ahlgren satisfies his restitution obligations or receives further instructions from the court.
Ahlgren’s criminal actions involved purchasing approximately 1,366 Bitcoins in 2015 when the price was around $465 each. He later sold half of this stash for nearly $3.7 million in 2017. However, Ahlgren inflated the Bitcoin’s cost basis on his tax returns, effectively reducing his capital gain and the taxes owed. Additionally, Ahlgren sold more Bitcoin between 2018 and 2019 without reporting the transactions, further violating tax laws.
The case, which marks the first criminal tax evasion prosecution solely focused on cryptocurrency, underscores the growing scrutiny of digital assets in tax enforcement. According to Lucy Tan, the acting special agent in charge of IRS-Criminal Investigation’s Houston Field Office, the case demonstrates the government’s commitment to addressing cryptocurrency-related tax fraud.
Ahlgren’s sentence also includes one year of supervised release, adding another layer to his legal consequences. The outcome of this case signals a cautionary tale for cryptocurrency investors about the importance of tax compliance.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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