Frank Richard Algernon III, a Texas resident, was sentenced to 2 years in prison for filing false tax returns.
He falsely reported the capital gains from the sale of 3.7 million Dollars' worth of Bit on his tax returns.
Case of Cryptocurrency Profit Manipulation
According to court records, Algernon, an early Bit investor, filed false tax returns from 2017 to 2019. These returns underreported or completely omitted 4 million Dollars' worth of Bit sales.
In the US, under the federal cryptocurrency tax law, taxpayers must disclose all cryptocurrency sales, gains, or losses on their annual returns.
"This sentence is the first criminal tax evasion prosecution in the US focused solely on cryptocurrency. This case highlights the IRS's ability to track and prosecute cryptocurrency-related tax evasion." – Prominent influencer Wadi X (formerly Twitter) posted.
According to the report, Algernon started investing in Bit in early 2011. By 2015, he had acquired around 1,366 BTC through Coinbase. That year, Bit reached a peak market price of around $495 per BTC.
In October 2017, he sold 640 Bit at an average of $5,808 per Bit, netting $3.7 million. He used this profit to purchase a home in Utah.
However, while preparing his 2017 tax return, Algernon provided false information to his accountant to mislead them. He inflated Bit's purchase price to claim minimal gains. His manipulated figures exceeded Bit's market price at the time.
Over the next few years, Algernon sold an additional $650,000 worth of Bit, but did not report these transactions on his 2018 and 2019 tax returns.
To conceal his activities, he moved funds through multiple digital wallets, conducted cash exchanges in person, and used cryptocurrency mixers to obscure transaction details on the blockchain.
US Tightens Crypto Taxation, Others Ease Restrictions
Algernon's case reflects the increased scrutiny of cryptocurrency taxation in the US. Prominent figures like Roger Ver, known as the "Bit Jesus", also face serious tax-related charges.
The federal government accuses Ver of evading $48 million in taxes related to $240 million worth of cryptocurrency sales and his renunciation of US citizenship in 2014. The US prosecutors are seeking Ver's extradition, currently awaiting a decision from the Spanish courts.
While the US tightens cryptocurrency taxation, other countries are easing restrictions. The Czech Republic recently announced plans to abolish capital gains tax on cryptocurrencies held for more than 3 years. Transactions under $4,200 per year no longer require reporting.
In Russia, cryptocurrencies are classified as property under revised tax laws. Cryptocurrency transactions are exempt from value-added tax (VAT), and profits are taxed along with securities income. Personal income tax on cryptocurrency-related income is capped at a maximum of 15%.
These developments highlight the contrasting approaches to cryptocurrency taxation as countries seek to balance regulatory oversight while fostering innovation in the blockchain economy.
