The case marks the first time a crypto investor has to turn over his wallet keys
A Texas Bitcoin investor has been ordered by a federal court to turn over his cryptocurrency wallets and access codes after being convicted of tax fraud. The authorities in charge of these cases have had zero compassion and work around the clock to ensure that these misdeeds always have major consequences.
Frank Richard Ahlgren III, sentenced to two years in prison in December 2024, was found guilty of underreporting capital gains from Bitcoin sales totaling over $3.7 million between 2017 and 2019. The fraud resulted in more than $1 million in lost tax revenue.
Judge Robert Pitman of Austin Federal Court issued the restraining order on January 6, requiring Ahlgren, along with any associates, to surrender all devices used to store cryptocurrency. This includes providing public and private keys, seed phrases, and access codes.
The order also mandates full disclosure of all crypto accounts tied to Bitcoin, Ethereum, Litecoin, and other cryptocurrencies. Transfers of any assets are prohibited without court approval unless used for standard living expenses.
Ahlgren, who pleaded guilty in September 2024, inflated the cost basis of Bitcoin sold in 2017 to reduce reported gains and failed to report additional sales between 2018 and 2019. Prosecutors revealed that he employed various tactics, such as using multiple wallets and mixers, to obscure transactions.
The case has been called a landmark by IRS-Criminal Investigation officials, marking the first criminal prosecution for tax evasion involving cryptocurrency. Acting Special Agent Lucy Tan noted its significance in demonstrating the government’s commitment to pursuing tax compliance in digital currency markets.
Beyond his prison term, Ahlgren must repay $1.1 million in restitution and will serve a year of supervised release. The court order remains in effect until the restitution is fully paid or the court issues a further ruling. This case underscores the increasing scrutiny of cryptocurrency activities in tax law enforcement.
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