Early Bitcoin Investor Underreports $3.7M Sale, DOJ Says

A Texas man pleaded guilty to filing a false tax return that failed to recognize the capital gains associated with the sale of $3.7 million worth of bitcoin, the U.S. Department of Justice announced Thursday.

According to the DOJ’s press release, Frank Richard Ahlgren III invested in bitcoin in 2015 when their value was no more than $500 for each. Ahlgren sold almost 650 bitcoin for $3.7 million in 2017, and used all of the proceeds from that sale to purchase a home. He filed a return for the 2017 tax year “that substantially inflated the cost basis of the bitcoins, and therefore underreported his capital gain from his bitcoin sale,” the DOJ said.  

The press release also notes that In 2018 and 2019, Ahlgren made additional sales of bitcoin that earned him over $650,000 in capital gains, and failed to report those earnings on his tax returns. In total, Ahlgren’s underreporting cost the government more than $550,000 in taxes, the DOJ said. 

Ahlgren will be sentenced at a later date.

—Editing by Katie McNally, Emily Kokoll, and Karin Roberts.