Texan Bitcoin Investor Ordered to Surrender Crypto and Wallet Keys After Tax Fraud Conviction

Frank Richard Ahlgren III, who falsely underreported capital gains on over $3.7 million in Bitcoin (BTC) sales between 2017 and 2019, owes the US

An early Texan Bitcoin investor has been ordered to identify and hand over any physical devices used to store his cryptocurrency, along with any public keys, private keys, seed phrases or passphrases, as part of a restraining order.

Frank Richard Ahlgren III, who was sentenced in December to two years in prison for tax fraud, was ordered by Austin Federal Court Judge Robert Pitman on Jan. 6 to identify and provide the devices.

Ahlgren III, along with any of his family, friends or representatives, have also been ordered to identify all crypto accounts relating to Bitcoin, Bitcoin Cash, Bitcoin Gold, Ether and Litecoin and banned from shifting any of Ahlgren’s cryptocurrency without prior approval from the court.

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 is owing the U.S. government around $1.1 million in restitution after falsely underreporting capital gains on over $3.7 million in Bitcoin sales between 2017 and 2019.

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.