An Austin, Texas local was sentenced to two years in prison for filing a false tax return, where he underreported his income from selling bitcoins by $4 million.
According to court documents, Frank Richard Algren III, between 2017 and 2019, filed tax returns in which he underreported or failed to report BTC sales altogether.
Algren was one of the early investors in bitcoin, purchasing 1,366 BTC in 2015 through the Coinbase exchange at $495 per coin. In October 2017, he sold 640 BTC at an average price of $5,807 per bitcoin, netting $3.7 million, which he used to buy a house in Park City, Utah.
While preparing his 2017 tax return, Algren provided his accountant with false income data, claiming that he had purchased bitcoins at significantly higher prices than actual. This allowed him to greatly inflate the costs of acquiring assets and, thereby, reduce his taxable income.
In 2018 and 2019, Algren again sold bitcoins worth $65,000 but failed to declare it at all.
To hide the transactions and his address, Algren moved the cryptocurrency through numerous wallets, performed exchanges of bitcoins for cash at personal meetings, used cryptomixers, which add anonymity to transactions.
In his 2014 blog, Algren wrote about his knowledge of mixers and their ability to cover tracks.
As a result of his actions, over $1 million in taxes were lost.
Algren became the first in the US to be convicted for tax evasion solely related to cryptocurrency transactions. Besides two years of imprisonment, the court required the criminal to spend one year under supervision after release, and also to pay $1,095,031 in restitution to the US government.