A Texas federal court has delivered a landmark decision ordering Frank Richard Ahlgren III, a Bitcoin investor convicted of tax fraud, to relinquish his cryptocurrency keys and any equipment related to his digital assets. Ahlgren received a two-year prison sentence for his failure to register over $3.7 million in Bitcoin sales from 2017 to 2019, which led to a $1.1 million tax penalty.
Judge Robert Pitman of the Austin Federal Court ordered Ahlgren and his associates to turn over public and private keys, seed phrases, and any equipment used to hold cryptocurrency. The court also ordered Ahlgren to disclose all of his cryptocurrency accounts and forbade the transfer or sale of his digital assets without prior clearance. This includes a prohibition on any activity that may lower the value of his properties, with the exception of necessary living costs.
Ahlgren, found guilty of exaggerating the cost basis on his tax filings and concealing transactions through numerous techniques, paid $465 for Bitcoin in 2015 and sold it for $3.7 million years later. Prosecutors claimed that he tried to conceal his sales by using various wallets, in-person transactions, and cryptocurrency mixers. The overall tax loss resulting from his activities surpassed $1 million.
This is the first case in the United States that focuses completely on criminal tax evasion related to bitcoin. In addition to his prison sentence, Ahlgren must pay the government $1 million in compensation. After serving his prison term, the government sentenced him to one year of supervised release.
The court’s decision marks a significant shift in the legal landscape surrounding cryptocurrencies and might have far-reaching consequences for future tax cases involving digital assets.
