Satoshi-era Bitcoin buyer sentenced to two years for tax fraud

Frank Richard Ahlgren III, one of the first Bitcoin investors from Texas, was sentenced to two years in prison for tax evasion.

According to the Department of Justice, Ahlgren reported less than $3.7 million in Bitcoin (BTC) capital gains on his 2017 tax return and failed to disclose additional BTC sales worth $650,000 over the next two years.

According to the DOJ, “Ahlgren was an early investor in Bitcoin, having purchased Bitcoin as early as 2011,” which positions Ahlgren as a Satoshi-era investor. The Satoshi era generally refers to the period when Satoshi Nakamoto, the creator of Bitcoin, was active from late 2009 to 2011.

Ahlgren is reportedly the first Bitcoin investor to be jailed for crypto tax gains.

Early Bitcoin Investor Frank Richard Ahlgren III, or Paco, is accused of failing to report/misreporting his cryptocurrency earnings.
– Bitcoin sales of $3.7 million with taxes between 2017-2019.
– penalty: 2 years imprisonment

His story is a striking reminder of the crypto tax… pic.twitter.com/npuKjapivK

— Chad All in One Best Daily Crypto News (@Chad_allin) December 13, 2024

Ahlgren’s secret transfers

Prosecutors revealed that Ahlgren manipulated the cost basis of BTC transactions to lower reported capital gains in 2017, significantly reducing his tax liability. Ahlgren misrepresented his profit from the sale of 640 BTC, which he used to purchase a house in Utah.

Ahlgren concealed additional BTC sales through mixers, wallet transfers, and in-person cash exchanges from 2018 to 2019. These actions resulted in tax losses of over $1 million.

U.S. District Court Judge Robert Pitman also ordered Ahlgren to pay $1.1 million in restitution and be sentenced to one year of supervised release following his prison sentence.

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