An Austin, Texas, man, Frank Richard Algren III, has been sentenced to two years in prison for filing false tax returns that did not report capital gains from the sale of $3.7 million worth of Bitcoin, the US Department of Justice (DOJ) said. Announce today.
According to the Department of Justice, Ahlgren was an early investor in bitcoin, beginning to purchase bitcoin in 2011. In 2015, he acquired 1,366 bitcoins through his Coinbase account, a year in which the price of bitcoin peaked at around $495. For each currency. By October 2017, the value of bitcoin had risen, and Ahlgren’s company sold 640 bitcoins for $5,807 each, for a total profit of $3.7 million. He then used the proceeds to buy a house in Park City, Utah.
However, when filing his 2017 tax return, Ahlgren misrepresented gains by inflating the cost basis of his Bitcoin purchases, claiming he acquired the coins at above market prices. This misreporting resulted in a significant decrease in reported capital gains.
Between 2018 and 2019, Ahlgren sold more than $650,000 worth of additional bitcoins, but failed to fully report these transactions on his tax returns. In an attempt to hide his gains, he transferred funds through multiple wallets, exchanged Bitcoin for personal cash, and used mixers to anonymize his Bitcoin transactions.
In all, the Justice Department said Ahlgren’s actions resulted in a tax loss of more than $1 million.
“Frank Algren III made millions buying and selling bitcoin,” but instead of paying the taxes he knew he was due, he lied to his accountant about the extent of a large portion of his gains, said Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division. He sought to hide another portion of his profits through sophisticated techniques designed to hide his transactions on the Bitcoin blockchain. This behavior today led to him being sentenced to two years in prison.
U.S. District Judge Robert Pittman sentenced Algren to two years in prison, followed by one year of supervised release. Additionally, Ahlgren was ordered to pay $1,095,031 in restitution to the United States government.
“Ahlgren will serve time because he believes his cryptocurrency transactions cannot be traced. This case proves that no one is above the law. “The IRS criminal investigation has the expertise and tools to track financial activity, whether it involves dollars, pesos or cryptocurrency.” “This case represents the first criminal prosecution for tax evasion centered solely around cryptocurrencies. As the prices of cryptocurrencies rise, the temptation to not pay taxes on selling them is also high. Avoid temptation and avoid federal prison.