On December 13, the U.S. Department of Justice announced that Frank Richard Ahlgren III, a resident of Austin, Texas, was sentenced to two years in prison for falsely reporting $3.7 million in Bitcoin trading income. Court documents show that Ahlgren began investing in Bitcoin in 2011, purchasing approximately 1,366 Bitcoin through Coinbase in 2015, with a peak price of around $495.56 that year. In October 2017, he sold 640 Bitcoin at a price of approximately $5,807.53 per Bitcoin, netting $3.7 million, which he used to purchase a home in Park City, Utah.
To evade taxes, Ahlgren provided his accountant with false transaction records, falsely reporting the cost basis as much higher than the actual price. Between 2018 and 2019, he concealed over $650,000 in Bitcoin transaction records through the use of multiple wallets, cash transactions, and mixing services. His tax evasion resulted in a tax loss of over $1 million. In addition to the prison sentence, the court ordered him to pay $1,095,031 in restitution.
Lucy Tan, the acting special agent in charge of the Houston office of the IRS Criminal Investigation Division, emphasized that this is the first criminal tax evasion case fully focused on cryptocurrency, and it will serve as an important warning to the industry. The IRS Criminal Investigation Division and the Texas Attorney General's Office are currently conducting further investigations into the case.
