Coinbase User Gets 2 Years in Prison for Filing False Tax Returns

• Frank Richard Ahlgren III, an early bitcoin investor since 2011, acquired 1,366 BTC through Coinbase in 2015 when bitcoin peaked at approximately $495 each.
• In October 2017, as bitcoin’s value increased, he sold 640 BTC for $5,807 each, netting $3.7 million. He used the proceeds to purchase a home in Park City, Utah.
• Ahlgren then reportedly concealed his profits by providing false information to his accountant, claiming he had purchased the bitcoins at a higher price than he actually did.
• Additionally, he attempted to hide bitcoin sales totaling over $650,000 in 2018 and 2019 by using various wallets, mixers, and engaging in in-person cash exchanges.

"Frank Ahlgren III earned millions buying and selling bitcoins but instead of paying the taxes he knew were due, he lied to his accountant about the extent of a large portion of his gains, and sought to conceal another chunk of his profits through sophisticated techniques designed to obscure his transactions on the bitcoin blockchain. That conduct today earned him a two-year sentence," said Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.

• In addition to a two-year prison sentence, Ahlgren must serve one year of supervised release and pay $1.1 million in restitution to the U.S. government.
• The DOJ reported that his actions caused "a tax loss of over $1 million."

"This case marks the first criminal tax evasion prosecution centered solely on cryptocurrency. As the prices for cryptocurrency are high, so is the temptation to not pay taxes on its sale. Avoid the temptation and avoid federal prison," said Acting Special Agent in Charge Lucy Tan of IRS-Criminal Investigation (IRS-CI)’s Houston Field Office.

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