Bitcoin investor ordered to hand over crypto keys in landmark tax case
2025-01-08
Category: None

An early Texan Bitcoin investor has been ordered to surrender his crypto and other wallet private keys and access codes as part of a restraining order after being sentenced in December to two years in prison for tax fraud.
Frank Richard Ahlgren III, who falsely underreported capital gains on over $3.7 million in Bitcoin BTCUSD sales between 2017 and 2019, owes the US government around $1.1 million in restitution.
Austin Federal Court Judge Robert Pitman on Jan. 6 ordered Ahlgren, along with any of his family, friends or representatives, to identify and provide any physical devices used to store his cryptocurrency, along with any public keys, private keys, seed phrases or passphrases.
Pitman also ordered the parties to identify all crypto accounts relating to Bitcoin, Bitcoin Cash BCHUSD, Bitcoin Gold (BTG), Ether ETHUSD and Litecoin LTCUSD and banned them from shifting any of Ahlgren’s cryptocurrency without prior approval from the court — including any action that could conceal, depreciate or diminish their value, unless it is used for “normal monthly living expenses.” 
The order will be in full force until Ahlgren satisfies any restitution obligation ordered by the court or until further order from the court. 
Ahlgren pleaded guilty to filing a false tax return in September 2024 and was sentenced in December. 
In 2015 — a year when Bitcoin peaked at around $465, he purchased approximately 1,366 Bitcoin using Coinbase. He then sold around half of it two years later at around $5,800 per Bitcoin for $3.7 million but “substantially inflated” the cost basis of the Bitcoin in his 2017 tax return, thereby making the capital gain less than it actually was. 
Ahlgren then sold Bitcoin for more than $650,000 between 2018 and 2019 but did not report the sales on his tax returns. Prosecutors said he used multiple wallets, in-person transfers and mixers in an attempt to conceal details about the transaction. 
The total tax losses from all his actions are over $1 million. 
He’s also ordered to serve one year of supervised release on top of his 24-month prison sentence. 
Ahlgren’s case marked the first criminal tax evasion prosecution centered solely on cryptocurrency, according to the acting special agent in charge of IRS-Criminal Investigation’s Houston Field Office, Lucy Tan. 