A federal judge ordered early action Bitcoin An investor has handed over encryption keys that could unlock nearly $124 million worth of cryptocurrencies, marking an unprecedented step in the US government's efforts to seize digital assets in tax evasion cases.

Under the order issued by US District Judge Robert Pittman on Monday, Algren must disclose everything Private keys Identify any devices he used to store cryptocurrencies, e.g Hardware wallets.

The order extends beyond just access to the wallet, as Ahlgren and any of his associates are prohibited from transferring or hiding any digital assets without court approval, though they can use the funds to cover “normal monthly living expenses.”

The order is intended to help recover about $1 million in compensation following Ahlgren's conviction in December. Our initial coverage of the order appeared first on Bloomberg.

Evading taxes with cryptocurrencies? Not so fast

In February of last year, federal prosecutors Released A seven-count indictment against Richard Ahlgren III, also known as “Paco,” marking the first criminal tax evasion case in the United States centered solely around cryptocurrency trading.

The Austin, Texas, resident faced three counts of filing false tax returns and four counts of illegal structuring of cash deposits. By December last year, so was Algren He was sentenced to two years In prison for falsely reporting capital gains he earned from selling $3.7 million worth of Bitcoin.

“(…) Instead of paying the taxes he knew were due, he lied to his accountant about the size of a significant portion of his gains,” Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division said in 2013. Department of Justice press release at that time.

Goldberg stated that Ahlgren “sought to hide another portion of his profits” using “sophisticated techniques designed to hide his transactions on the Bitcoin blockchain.”

The indictment explains precisely how Bitcoin transactions work, explaining that although the blockchain is public, Ahlgren allegedly attempted to hide his activities through multiple techniques.

Decryption I have reached out to the Department of Justice and will update this article if they respond.

Setting a precedent

What makes the Ahlgren case groundbreaking is its focus on intentional manipulation of cryptocurrency cost basis calculations and sophisticated attempts to hide blockchain transactions, effectively creating a guide for the future. Crypto tax enforcement.

US regulators are taking a tougher approach to enforcement as Congress struggles to create clear regulatory frameworks for crypto assets, an industry of 2024. review From blockchain forensics firm Elliptic suggests.

At least before major changes to cryptocurrency legislation are in place, the United States “continues to remain a challenging regulatory environment for cryptocurrency market participants” due to “a lack of progress in issuing cryptocurrency-related legislation,” as well as a “regulatory stance that relies heavily on Enforcement,” as stated in the report.