Frank Richard Ahlgren III, an early bitcoin investor, was sentenced to two years in prison for falsifying his tax returns to hide capital gains from the sale of BTC. This case marks the first criminal prosecution for tax evasion focused exclusively on cryptos in the United States.
Falsification of bitcoin income
After purchasing his first bitcoins in 2011, Ahlgren continued this trend by purchasing approximately 1,366 BTC through Coinbase in 2015. But, in October 2017, he sold approximately 640 bitcoins for a total of $3.7 million at a price average of $5,807.53 per BTC, in order to buy a house in Park City, Utah.
However, he submitted tax returns that understated the gains made and used sophisticated techniques to conceal his transactions. In particular: the use of several wallets, the exchange of BTC for cash in person and also mixers to anonymize your crypto transactions.
Worse still, Ahlgren lied to his accountant in 2017, submitting a falsified summary of his gains and losses and claimed to have purchased the bitcoins at a much higher price than the actual price. Thus inflating the cost basis and artificially reducing its reported capital gains. Unfortunately for him, the deception didn't work for long and the authorities arrested him.
A warning for all tax evaders
Franck Ahlgren was sentenced to 2 years in prison, plus an additional year of supervised release, and will have to repay $1,095,031 in restitution to the United States. The United States Department of Justice pointed out that this case is a warning for all crypto investors. “As crypto prices are high, so is the temptation to avoid paying taxes on their sale. Avoid this temptation and avoid federal prison.” Highlights Lucy Tan, special agent.
This case highlights the importance of transparency and tax compliance in the crypto space. With bitcoin now targeting $132,000, it is wise to remind investors that any gains made will have to be reported like any other income.
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