Failure to report Crypto Assets for taxation, BTC early investors sentenced and surrender Private Key

An early BTC investor was sentenced for tax fraud for not reporting BTCCapital Gains Tax. In addition to a two-year imprisonment, he was also ordered to disclose his Private Key so that US officials could unlock the BTC, currently valued at approximately $124 million.

Convicted for not reporting capital gains from Bitcoin

Frank Richard Ahlgren III was the first American to be convicted of tax evasion related to cryptocurrency. He pleaded guilty in September last year because the tax return he submitted falsely reported the capital gains he made from selling $3.7 million worth of Bitcoin.

According to court documents and statements, Frank Richard Ahlgren III submitted false tax returns between 2017 and 2019, underreporting or failing to report BTC sales transactions worth $4 million, from which he made substantial profits. All taxpayers must report any sales proceeds and gains or losses from the sale of cryptocurrencies such as BTC on their tax returns to their national tax authorities.

Ahlgren is an early investor in BTC. He purchased about 1,366 BTC in 2015, when the value of each BTC was less than $500. In October 2017, Ahlgren sold about 640 BTC at a price of about $5,807.53 per BTC, with a total value of $3.7 million. Subsequently, Ahlgren submitted a false tax return to the Internal Revenue Service (IRS) for 2017, significantly raising the cost basis of BTC, thus underreporting the capital gains he obtained from the sale of BTC.

In 2018 and 2019, Ahlgren sold over $650,000 worth of Bitcoin, but did not report any amount on the tax return.

The IRS determined that Ahlgren's actions caused over $550,000 in tax losses, ultimately resulting in a $1 million fine and a two-year prison sentence.

The court demands the Private Key to be handed over.

According to Bloomberg, US District Judge Robert Pitman ruled on Monday that Frank Richard Ahlgren III must surrender his Private Key and storage devices, while disclosing all of his cryptocurrency accounts.

The prosecutor stated in the request that Ahlgren's assets 'cannot be seized through ordinary physical means' and requested that any cryptocurrency be restricted from being moved in accordance with the court's order. They also requested access to the Private Key to ensure that it cannot be moved by others, as the cryptocurrency would be irretrievable if the Private Key is lost or destroyed.

Without prior approval from the court, Ahlgren cannot transfer or sell any virtual currency assets, but he can spend 'normal monthly living expenses'.

Digital assets are considered property and must be declared truthfully

In US tax law, digital assets are treated as property, and their income is subject to taxation. This includes digital assets received, or the sale or disposal of digital asset ownership, regardless of whether taxable gains or losses are generated, must be reported to the IRS annually.

This case is the first in the United States to convict for falsely reporting capital gains from cryptocurrency, not only requiring repayment of the unreported taxes, but also imposing fines and a two-year sentence. Is this to serve as a deterrent effect?

This article did not truthfully report the cryptocurrency tax, and the early BTC investors were sentenced to imprisonment and handed over the Private Key, which first appeared on ChainNews ABMedia.