A pioneering Bitcoin investor from Texas, Frank Richard Ahlgren III, has been mandated by a federal court to turn over private keys, public keys, and access codes to his cryptocurrency wallets. This comes as a consequence of a tax fraud sentencing which saw Ahlgren face a two-year imprisonment term back in December. Ahlgren had reported an underestimation on his capital gains, which were mainly derived from Bitcoin sales amounting to over $3.7 million between the years 2017 and 2019. This has resulted in him owing the US government a restitution sum of approximately $1.1 million.
The presiding judge, Justice Robert Pitman, of the Austin Federal Court, gave the order on Jan. 6, directing Ahlgren and his family, friends, or representatives to provide any devices hosting his cryptocurrency. This covers anyone in possession of his keys, seed phrases, and passphrases. Justice Pitman has ordered that all crypto accounts associated with Bitcoin, Bitcoin Cash, Bitcoin Gold, Ether, or Litecoin be identified, along with an imposed prohibition on any of Ahlgren’s crypto being moved without prior court approval.
The stipulation goes even further to prevent any activities which might devalue, obscure, or reduce the value of his cryptocurrency, except for the purpose of accommodating “normal monthly living expenses”. The execution of these instructions will last until Ahlgren has fully met any restitution ordered by the court or further directives are given by the court.
Ahlgren admitted to bringing in a false tax return in September 2024 and was sentenced in December. Back in 2015, when Bitcoin capped at approximately $465, Ahlgren bought approximately 1,366 Bitcoins through Coinbase. He sold almost half two years later for $5,800 per Bitcoin, earning $3.7 million, and falsified the cost basis of the Bitcoin on his 2017 tax return, which made it seem as though the gains were less than the reality.
In 2018 and 2019, Ahlgren sold Bitcoin earning over $650,000, but failed to report these sales on his tax returns. The prosecution’ve stated that he utilized several wallets, personal transactions, and mixers in an attempt to obscure transaction details. These maneuvers led to tax losses exceeding $1 million in total. Following his two-year prison sentence, Ahlgren is required to serve a supervised release for one year. This case featuring Ahlgren marks the first criminal tax evasion investigation focused solely on cryptocurrency, as stated by Lucy Tan, the acting special agent heading IRS-Criminal Investigation’s Houston Field Office.