Frank Richard Ahlgren III, an Austin-based Bitcoin investor, was sentenced to two years in prison for tax evasion related to his $1 million in cryptocurrency gains.
Ahlgren, who began purchasing Bitcoin in 2011, evaded taxes on earnings from his cryptocurrency investments by employing a series of deceptive tactics, including using digital mixers and multiple wallets to obscure his transactions.
Despite his belief that these efforts would make his trades untraceable, the IRS was able to uncover his activities.
Ahlgren’s scheme began in 2015 when he purchased 1,366 Bitcoin, and later sold 640 BTC in 2017 for $3.7 million.
However, he failed to report his profits and submitted false tax returns, including inflating the purchase price of his Bitcoin to mislead his accountant. In 2018 and 2019, he sold even more Bitcoin, concealing over $650,000 in additional earnings.
The case is significant as it is the first known criminal tax evasion conviction in the US based exclusively on cryptocurrency transactions.
The IRS has been increasing its focus on crypto tax evasion, with efforts like “Operation Hidden Treasure” training agents to detect digital assets hidden from tax authorities.
Lucy Tan, Acting Special Agent in Charge of IRS Criminal Investigation, warned that Ahlgren’s case serves as a reminder that no one, regardless of their cryptocurrency expertise, is above the law.
As Bitcoin’s value rises, tax experts caution investors not to fall into the temptation of evading taxes on their gains, as such actions can lead to serious legal consequences.
