Étienne Girard
A federal judge has mandated that an early Bitcoin investor hand over encryption keys potentially unlocking $124 million in cryptocurrency. This landmark decision marks a significant step in the U.S. government’s strategy to recover digital assets tied to tax evasion cases.
According to the ruling issued by U.S. District Judge Robert Pitman on Monday, Richard Ahlgren III, the defendant, must provide private keys and disclose all devices used to store cryptocurrency, including hardware wallets. The order also prohibits Ahlgren and his associates from transferring or concealing digital assets without court approval, except for essential living expenses.
The court’s directive seeks to recover $1 million in restitution following Ahlgren’s December conviction for tax evasion. Bloomberg was the first to report on this unprecedented ruling.
The U.S. Tightens Oversight of Crypto Tax Evasion
This case originated in February last year, when federal prosecutors filed a seven-count indictment against Ahlgren, also known as “Paco.” The charges included filing false tax returns and illegally structuring cash deposits. By December, he was sentenced to two years in prison for misreporting capital gains from selling $3.7 million worth of Bitcoin.
“Rather than fulfilling his tax obligations, Ahlgren misled his accountant about a significant portion of his gains,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg from the Justice Department’s Tax Division. “He also used advanced techniques to obscure his Bitcoin transactions on the blockchain.”
Setting a Precedent in Crypto Tax Enforcement
This case stands out for its focus on intentional manipulation of cryptocurrency cost basis calculations and sophisticated attempts to obscure blockchain activities. It provides a potential blueprint for future crypto-related tax enforcement efforts.
A 2024 review by blockchain forensics firm Elliptic suggests that U.S. regulators are increasingly relying on enforcement actions while legislative progress on cryptocurrency regulation remains slow.
“The U.S. regulatory environment continues to be challenging for crypto market participants,” the report noted, highlighting reliance on enforcement in the absence of comprehensive legislation.
As Congress debates a clear regulatory framework for digital assets, cases like Ahlgren’s underline the growing focus on enforcing compliance within the crypto space.
