A Texas resident, Frank Richard Ahlgren III, received a two-year prison sentence for filing false tax returns.
These tax returns misrepresented the capital gains he made from selling $3.7 million in Bitcoin.
A Case of Manipulation of Cryptocurrency Profits
File court revealed that Ahlgren, an early Bitcoin investor, filed false tax returns between 2017 and 2019. These returns either incorrectly reported or completely omitted the proceeds from the sale of $4 million in Bitcoin .
In the US, federal tax laws related to cryptocurrencies require taxpayers to disclose all cryptocurrency purchases and sales, including profits and losses, in their annual tax returns.
“This verdict marks the first criminal tax fraud prosecution in the United States focused entirely on cryptocurrency. This case highlights the IRS’s ability to track and prosecute crypto-related tax evasion,” noted influencer, Wadi, wrote on X (formerly Twitter).
According to reports, Ahlgren started investing in Bitcoin in 2011. By 2015, he owned about 1,366 BTC through Coinbase. The highest market value of BTC that year reached around 495 USD per BTC.
In October 2017, he sold 640 Bitcoins for $3.7 million at an average price of $5,808 per coin. He used this money to buy a house in Utah.
However, Ahlgren provided false information to deceive accountants when preparing his 2017 tax return. He declared a higher purchase price for Bitcoins than it actually was to claim negligible profits. The numbers he arranged himself even exceeded the market price of Bitcoin at the time.
In the following years, Ahlgren sold more than $650K worth of additional Bitcoin without reporting these transactions on his 2018 and 2019 tax returns.
To conceal his activities, he moved funds through multiple digital wallets, made direct cash transactions, and used cryptocurrency “mixing” services to hide transaction details on the blockchain.
Cryptocurrency Taxes Remain a Growing Concern
Ahlgren’s case reflects the increased scrutiny on cryptocurrency taxation in the US. Famous figures like Roger Ver, known as “Bitcoin Jesus,” are also facing serious tax-related charges.
The Federal Government has accused Ver of evading $48 million in taxes from the sale of $240 million in cryptocurrency and tax obligations related to his renunciation of US citizenship in 2014. US prosecutors are asking Ver’s extradition is currently awaiting a court decision in Spain.
While the US tightens controls on cryptocurrency taxes, other countries loosen regulations. The Czech Republic recently announced plans to eliminate capital gains taxes on cryptocurrencies held over three years. Transactions under $4,200 per year will no longer have to be reported.
In Russia, cryptocurrencies are now classified as property under updated tax laws. Cryptocurrency transactions are exempt from value-added tax (VAT), and trading income will be taxed along with securities income. Personal income tax on income from cryptocurrency is a maximum of only 15%.
These developments highlight opposing approaches to cryptocurrency taxation around the world as countries balance between regulatory oversight and promoting innovation in the blockchain economy.