Early Bitcoin Investor Arrested For Failing To Report Capital Gains From $3.7 Million BTC Sales Between 2017 And 2019

An early Bitcoin investor from Austin, Texas, has been arrested for failing to report crypto capital gains involving the sale of around $3.7 million worth of BTC.

Investor Frank Richard Ahlgren III “falsely underreported (realized) capital gains” earned from the sale of approximately $3.7 million in BTC between 2017 and 2019, the US Department of Justice (DOJ) said in a Dec. 12 report .

Bitcoin Investor Started Buying BTC Back In 2011

Ahlgren started investing in BTC in 2011. In 2015, he purchased 1,366 Bitcoins on the leading US crypto exchange Coinbase when BTC was trading under $500. Two years later in 2017, the investor then sold 640 BTC at an average price of $5,807.53 before reinvesting $3.7 million into real estate.

However, authorities identified discrepancies in Ahlgren’s 2017 federal income tax return. In their report, the DOJ said the investor “filed a false 2017 federal income tax return that substantially inflated the cost basis of the bitcoins, thereby underreporting  his true capital gain from his sale of bitcoins.”

Ahlgren also did not report BTC sales valued at more than $650,000 between 2018 and 2019. He allegedly attempted to conceal the movement of his funds using multiple crypto wallets, crypto mixers and in-person cash transactions, according to the DOJ. “In total, the tax loss from Ahlgren’s criminal conduct was over $1 million,” the DOJ said in the report.

First Criminal Tax Evasion Prosecution Related To Crypto

Ahlgren was sentenced to two years in prison for underreporting his realized gains from the BTC sales. Acting Special Agent Charge Lucy Tan of the Internal Revenue Service’s Criminal Investigation Houston Field Office said this is the “first criminal tax evasion prosecution centered solely on cryptocurrency.”

On top of the two-year prison sentence, the Bitcoin investor has also been ordered to serve one year of supervised release and to pay $1.1 million in restitution to the US government.

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