A Texas resident, Frank Richard Ahlgren III, has been sentenced to two years in prison. His crime? Filing false tax returns that misrepresented his capital gains from selling Bitcoin worth $3.7 million.
Court documents reveal that Ahlgren, an early Bitcoin investor, submitted fraudulent tax returns between 2017 and 2019. He underreported or completely omitted proceeds from the sale of $4 million in Bitcoin. In the U.S., taxpayers must report all cryptocurrency sales, including any gains or losses, on their annual returns.
As popular influencer Wadi noted on X (formerly Twitter), “This sentencing marks the first criminal tax evasion prosecution in the U.S. centered solely on cryptocurrency.” This case shows how the IRS can track and prosecute tax evasion involving cryptocurrencies.
Reports indicate that Ahlgren started investing in Bitcoin as early as 2011. By 2015, he had acquired about 1,366 BTC through Coinbase. That year, the highest market price reached around $495 per BTC. In October 2017, he sold 640 Bitcoin for $3.7 million, averaging $5,808 per token. He used those funds to buy a home in Utah.
However, Ahlgren misled his accountant while preparing his 2017 tax return. He inflated the purchase prices of his Bitcoins to claim minimal gains. His fabricated figures even exceeded the market price of Bitcoin at that time.
In the following years, Ahlgren sold more Bitcoin worth over $650,000 without reporting these transactions on his 2018 and 2019 tax returns. To hide his activities, he moved funds through multiple digital wallets, conducted cash exchanges in person, and used crypto mixers to obscure transaction details on the blockchain.
Ahlgren’s case highlights the increasing scrutiny around crypto taxation in the U.S. Other high-profile figures, like Roger Ver, known as “Bitcoin Jesus,” are also facing serious tax-related charges. The federal government accuses Ver of evading $48 million in taxes tied to the sale of $240 million worth of cryptocurrencies. They are also pursuing a tax obligation linked to his renunciation of U.S. citizenship in 2014. Currently, U.S. prosecutors are seeking Ver’s extradition, which is waiting for a court decision in Spain.
While the U.S. tightens its grip on cryptocurrency taxation, other countries are easing their restrictions. For instance, the Czech Republic plans to eliminate capital gains taxes on crypto held for more than three years. Transactions below $4,200 annually will no longer require reporting.
In Russia, cryptocurrency is now classified as property under updated tax laws. Crypto transactions are exempt from value-added tax (VAT), and earnings will be taxed alongside securities income. Personal income tax on crypto-related earnings is capped at 15%.
These developments illustrate the different approaches to crypto taxation worldwide. Countries are trying to balance regulatory oversight with fostering innovation in the blockchain economy.