An early Bitcoin investor falsely reported earnings, causing a tax loss of over $550,000 to the IRS, and faces up to 3 years in prison

ChainCatcher news, according to Bitcoin.com, the U.S. Department of Justice (DOJ) recently announced that an early Bitcoin investor has admitted to "submitting a false report on his cryptocurrency earnings in his tax return." Texas resident Frank Richard Ahlgren III admitted to underreporting the capital gains from the sale of Bitcoin worth $3.7 million.

According to court documents, Ahlgren purchased 1,366 Bitcoins in 2015, each worth no more than $500. In October 2017, he sold 640 Bitcoins for approximately $3.7 million and used the proceeds to buy a house in Park City, Utah. However, Ahlgren's 2017 tax return incorrectly inflated his cost basis for purchasing Bitcoin, resulting in underreported capital gains. Additionally, he did not report $650,000 in Bitcoin sales in 2018 and 2019.

The Department of Justice stated, "Overall, Ahlgren caused a tax loss to the IRS of over $550,000."

Ahlgren will be sentenced later. He faces a maximum of three years in prison, along with a period of supervised release, restitution, and fines. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors, "the DOJ explained.