Texas Court Orders Bitcoin Trader to Surrender $124 Million in Crypto Keys

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A Texas court has ordered Richard Ahlgren III, an early Bitcoin investor, to hand over the private keys controlling $124 million in cryptocurrency. The decision follows Ahlgren’s conviction in a groundbreaking case focused on tax-related cryptocurrency fraud last year. This marks a significant moment in the enforcement of digital asset laws.

The Court’s Ruling

U.S. District Judge Robert Pitman ruled that Ahlgren must reveal the encryption keys to his crypto wallets and identify all storage devices holding digital assets. This measure is intended to recover $1 million in restitution owed by Ahlgren after his conviction. 

While the court allows limited access to funds for living expenses, it has prohibited Ahlgren and his associates from moving or hiding the assets without prior approval.

Background of the Case

Nicknamed “Paco,” Ahlgren faced a seven-count indictment in 2023 for misreporting capital gains from $3.7 million in Bitcoin transactions. Prosecutors from the Department of Justice (DOJ) revealed that Ahlgren used sophisticated blockchain techniques to hide the extent of his gains and lied to his accountant about his earnings. 

Acting Deputy Assistant Attorney General Stuart M. Goldberg highlighted Ahlgren’s efforts to obscure his activities, calling it a critical case for cryptocurrency tax compliance.

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Why This Matters

This case sets an example for how tax violations involving cryptocurrency are handled. It shows that the government has the power to force individuals to provide access to digital assets when crimes are involved.

The decision also reflects the increasing focus on cryptocurrency enforcement. According to blockchain intelligence firm Elliptic, U.S. regulators are stepping up their efforts while lawmakers work on creating clearer crypto rules.