Early Bitcoin Investor Sentenced to Prison for Tax Evasion on $3.7 Million BTC Sale

Credit : bitcoinmagazine.com

An Austin, Texas man, Frank Richard Ahlgren III, has been sentenced to 2 years in jail for submitting false tax returns that underreported capital features from the sale of $3.7 million value of bitcoin, the U.S. Division of Justice (DOJ) studies ) announced Immediately.

In accordance with the DOJ, Ahlgren was an early Bitcoin investor who began shopping for Bitcoin in 2011. In 2015, he acquired 1,366 bitcoins by his Coinbase account, a yr when the worth of bitcoin peaked at about $495 per coin. By October 2017, Bitcoin’s worth had soared and Ahlgren bought 640 bitcoins for $5,807 every, making a complete revenue of $3.7 million. He then used the proceeds to buy a home in Park Metropolis, Utah.

Nevertheless, when submitting his 2017 tax returns, Ahlgren misrepresented earnings by inflating the price foundation of his bitcoin purchases, claiming he acquired the cash at costs greater than market charges. This misreporting considerably lowered reported capital features.

Between 2018 and 2019, Ahlgren bought extra bitcoins value greater than $650,000, however failed to totally report these transactions on his tax returns. In an try to cover his winnings, he transferred funds by a number of wallets, personally exchanged bitcoin for money, and used mixers to anonymize his bitcoin transactions.

In complete, the DOJ said that Ahlgren’s actions resulted in a tax lack of greater than $1 million.

“Frank Ahlgren III made thousands and thousands shopping for and promoting bitcoins,” mentioned Appearing Deputy Assistant Lawyer Basic Stuart M. Goldberg of the Justice Division’s Tax Division. “However as a substitute of paying the taxes he knew had been due, he lied to his accountant in regards to the dimension of a lot of his earnings, and tried to cover one other portion of his earnings utilizing refined methods that designed to obscure his transactions on the bitcoin blockchain. That conduct at present earned him a two-year jail sentence.”

U.S. District Court docket Choose Robert Pitman sentenced Ahlgren to 2 years in jail, adopted by one yr of supervised launch. As well as, Ahlgren was ordered to pay $1,095,031 in restitution to the U.S. authorities.

“Ahlgren will serve a jail sentence as a result of he believed his cryptocurrency transactions had been untraceable. This case exhibits that nobody is above the legislation. My staff at IRS Legal Investigation has the experience and instruments to trace monetary exercise, whether or not it entails {dollars}, pesos or cryptocurrency,” mentioned Appearing Particular Agent in Cost Lucy Tan of the Houston Discipline Workplace of IRS-Legal Investigation (IRS-CI ). . “This case marks the primary felony tax evasion prosecution targeted solely on cryptocurrency. As a result of cryptocurrency costs are excessive, there’s a temptation to not pay taxes on its gross sales. Keep away from temptation and keep away from federal jail.”