Key Takeaways
- Court orders surrender of $124M Bitcoin stash keys.
- Ahlgren owes $1.1M in taxes after underreporting Bitcoin sales.
- Case serves as a warning against crypto-related tax evasion.
A Texas federal court has mandated Frank Richard Ahlgren III, an early Bitcoin investor, to disclose private keys to his digital assets, valued at approximately $124 million.
The order follows Ahlgren’s December 2024 conviction for tax fraud, marking the first U.S. case of Bitcoin-related tax evasion.
Ahlgren underreported millions in capital gains from Bitcoin sales between 2017 and 2019.
Prosecutors revealed he sold 683 Bitcoin for $3.7 million in 2017 and later another $650,000 worth, while inflating his cost basis and omitting sales entirely.
Ahlgren now owes $1.1 million in taxes and restitution.
Restrictions on asset use
Judge Robert Pitman issued a restraining order requiring Ahlgren to turn over private keys, passcodes, and storage devices for assets, including Bitcoin, Ethereum, and Litecoin.
Ahlgren, his family, and associates are prohibited from transferring or hiding assets without court approval.
Funds may only be used for “normal monthly living expenses” until restitution is resolved.
Prosecutors emphasized the critical importance of private keys, noting:
Should the private keys be lost or destroyed, the virtual currency is irretrievable.
Government’s warning to crypto users
The case highlights tax evasion risks in the digital asset space.
Lucy Tan, IRS-CI acting special agent, stated:
Bitcoin transactions are taxable, and trying to evade taxes has consequences.
Ahlgren’s lawyer, Dennis Kainen, confirmed his client’s intent to comply with the court’s directive.
