Bitcoin Investor Sentenced for Tax Fraud Ordered to Disclose Passcodes for $124 Million in Digital Assets

Frank Richard Ahlgren III has made history by becoming the first US citizen convicted of tax crimes tied to… cryptocurrency sales. 

Ahlgren, an early Bitcoin (BTC) investor, was sentenced to two years in prison for tax fraud, according to a Bloomberg report. 

A federal judge ordered him to disclose the private keys to his crypto stash worth approximately US$124M (AU$199M). 

Related: Ripple CEO Hints at Bullish 2025, Says Team Trump About to ‘Jumpstart’ Crypto

The ruling was issued Monday by US District Judge Robert Pitman in Austin, Texas, and requires Ahlgren to identify any devices storing the passcodes and to provide details of all his cryptocurrency accounts.

Owning $1M Worth of Crypto to the Government

Ahlgren owes the US government US$1M (AU$1.6M) in restitution for underreporting capital gains from selling US$3.7M (AU$5.94M) worth of BTC. He pleaded guilty to the charges on September 12 and was sentenced on December 12. 

Prosecutors highlighted that Ahlgren had moved 1,287 Bitcoin in 2020 through a crypto-mixing service, making the assets harder to trace. Given Bitcoin’s meteoric rise since then, the assets have appreciated in value and are now worth over US$124M (AU$228M).

Judge Pitman’s order prohibits Ahlgren from transferring or selling property without prior court approval but allows him to cover routine living expenses. Moving on, prosecutors are desperately requesting the passcodes, noting that the funds are irretrievable without them. 

Ahlgren’s attorney, Dennis Kainen, confirmed his client’s intention to comply with the ruling:

We will comply with a court directive, or to the extent that we have a question, we will direct it to the court. We appreciate the care that Judge Pitman has taken throughout this case.

Dennis Kainen

Related: Vitalik’s Meme Magic: $1M in Memecoins Liquidated Causes Market Mayhem!

Prosecutors noted that he used part of his Bitcoin proceeds to purchase property in Park City, Utah. The case is titled US v. Ahlgren, 24-cr-00031, and is being heard in the Western District of Texas, Austin.