Key Takeaways
- Frank Ahlgren III was sentenced for evading taxes on $4M in Bitcoin sales.
- This case marks the first U.S. criminal tax evasion prosecution centered on cryptocurrency.
- Ahlgren faces two years in prison, a $1.1 million fine, and supervised release.
Frank Richard Ahlgren III, an early Bitcoin investor from Austin, Texas, has been sentenced to two years in prison for failing to report over $4 million in Bitcoin sales between 2017 and 2019.
The U.S. Department of Justice (DOJ) announced the decision on Dec. 12, emphasizing it as the first criminal tax evasion case involving cryptocurrency.
Background
Ahlgren began investing in Bitcoin in 2011 and bought 1,366 BTC in 2015 when prices were under $500.
By October 2017, he sold 640 BTC for approximately $3.7 million, reinvesting the funds into real estate.
However, discrepancies were found in his 2017 tax filings, where he inflated the cost basis of his Bitcoin holdings to reduce his reported capital gains.
DOJ
The DOJ also revealed that Ahlgren failed to report an additional $650,000 in Bitcoin sales in 2018 and 2019.
To evade detection, he used crypto mixers, wallet transfers, and cash transactions. His actions caused a tax loss exceeding $1 million.
Lucy Tan, Acting Special Agent in Charge of IRS Criminal Investigations, said:
Ahlgren will serve time because he believed his cryptocurrency transactions were untraceable. In addition to his prison term, Ahlgren must pay $1.1 million in restitution and serve a year of supervised release.
