Frank Richard Ahlgren III, an early Bitcoin investor, has been sentenced to two years in prison for tax fraud and is now required to provide U.S. authorities with the passwords to his crypto wallets, Bloomberg reports.
U.S. District Judge Robert Pitman in Austin, Texas, ordered Ahlgren to disclose all access codes, indicate any devices holding the keys, and reveal information about all his cryptocurrency accounts.
Hidden Assets Via “Mixer”
In December, prosecutors requested that the court compel Ahlgren to disclose the whereabouts of 1,287 BTC he had transferred in 2020 through a transaction-mixing service, a method often used to obscure crypto holdings. Since then, the value of those coins has doubled to over $124 million.
Background
Ahlgren is the first American convicted of tax crimes exclusively tied to cryptocurrency sales. In September, he pleaded guilty to concealing $3.7 million in income from Bitcoin sales, receiving a two-year prison sentence plus a $1 million fine to cover unpaid taxes.
The court further ruled that Ahlgren cannot sell, transfer, or otherwise dispose of his assets without the court’s permission, except for necessary living expenses.
Prosecutors’ Position
Prosecutors pointed out that Ahlgren’s assets cannot be seized using standard procedures. They emphasized that private keys are crucial; losing them would render the cryptocurrency inaccessible.
Ahlgren’s attorney, Dennis Kainen, stated his client will comply with the court order.
“We will adhere to the court’s instructions or clarify any issues directly if needed,” he said.
This case highlights the increasing focus by authorities on enforcing tax compliance in the cryptocurrency arena, and it may set a precedent for future cases involving digital assets.
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