Crypto tax evasion lands bitcoin bro on IRS naughty list

On Friday, an Austin-area man received a two-year prison sentence for underreporting his bitcoin earnings to the IRS, in what officials say is the first-ever criminal prosecution solely for crypto-related tax evasion (and also the first time a bitcoin bro hasn’t bragged about his gains).

• Federal prosecutors say Frank Abagnale Ahlgren III took “sophisticated steps” between 2017-2019 to try and conceal bitcoin gains worth ~$4.5 million.
• These include moving his bitcoins through multiple wallets, meeting an individual in person to exchange bitcoins for cash, and using technology designed to anonymize his crypto transactions.

The case comes amid increased IRS scrutiny of crypto transactions. The agency has started cracking down on tax evasion among the ~17% of Americans who own cryptocurrency, carrying out ~400 recent investigations involving virtual currency or digital assets as part of an ongoing effort called Operation Hidden Treasure.

🪙 The crackdown is set to continue: Starting next year, the IRS is requiring centralized crypto exchanges like Binance, Coinbase, and Kraken to report certain sales and exchanges of digital assets, including crypto.