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A Satoshi era Bitcoin investor has been sentenced to two years in federal prison. The allegations include falsifying tax returns to underreport gains from BTC sales totaling $4 million.
Bitcoin Investor Under Scrutiny
Court records reveal that Frank Richard Ahlgren III, an early Bitcoin investor, submitted inaccurate tax filings between 2017 and 2019, significantly misrepresenting the profits from his BTC transactions. Ahlgren initially purchased approximately 1,366 BTC through Coinbase in 2015, with Bitcoin prices peaking at $495.56 that year. In October 2017, he sold 640 BTC for $3.7 million, using most of the proceeds to buy a property in Park City, Utah.
When preparing his 2017 federal tax return, Ahlgren provided his accountant with incorrect data, inflating the purchase prices of the BTC he sold. The fabricated figures were higher than the actual market value of Bitcoin during that period, allowing him to significantly underreport his taxable income.
In subsequent years, Ahlgren continued evading taxes. He sold over $650,000 worth of Bitcoin in 2018 and 2019 but failed to disclose these transactions in his tax returns. To further obscure his activities, Ahlgren employed complex methods such as transferring BTC through multiple wallets, meeting individuals for cash exchanges, and using mixers to anonymize transactions.
A Look At Ongoing Investigation
The IRS uncovered Ahlgren’s activities, citing his deliberate attempts to hide his profits. Acting Deputy Assistant Attorney General Stuart M. Goldberg stated, “Frank Ahlgren III earned millions buying and selling bitcoins. But instead of paying the taxes he knew were due, he lied to his accountant and sought to conceal another chunk of his profits through sophisticated techniques designed to obscure his transactions.”
IRS Criminal Investigation (IRS-CI) also highlighted the broader implications of the case. “Ahlgren will serve time because he believed his cryptocurrency transactions were untraceable,” said Acting Special Agent in Charge Lucy Tan. “This case demonstrates that no one is above the law. My team has the expertise and tools to track financial activity, whether it involves dollars, pesos, or cryptocurrency.”
U.S. District Court Judge Robert Pitman ordered Ahlgren to pay $1,095,031 in restitution to the United States and serve one year of supervised release following his prison term.
The investigation was conducted by IRS-CI and the Texas Office of Attorney General, with prosecution handled by the Department of Justice’s Tax Division and the U.S. Attorney’s Office for the Western District of Texas.