A Texas bitcoin (BTC) investor is facing two years in prison after becoming the first person in history to be criminally charged for failing to report capital gains earned from crypto.

According to a US Department of Justice (DoJ) report from December 12, Frank Richard Ahlgren III “falsely underreported the (realized) capital gains” earned from selling Bitcoin worth $3.7 million between 2017 and 2019.

The report detailed how Ahlgren was an early investor in BTC and made his first purchases as early as 2011. In 2015, he bought approximately 1,366 BTC using his Coinbase account and sold 640 coins two years later for a total of $3.7 million. He reportedly used the proceeds to buy a house.

When it came time for Ahlgren to prepare his 2017 tax return, he lied to his accountant by submitting a false summary of his gains and losses from the sale of his BTC.

Specifically, he claimed that he bought the crypto at higher prices than he actually did, allowing him to underreport the true size of his gains. He also concealed gains on BTC sold for a total of $650,000 in 2018 and 2019 by moving it through multiple wallets and using mixers.

The total tax loss from Ahlgren’s activity totaled more than $1 million.

Read more: Ukraine to tax crypto like securities when it becomes legal next year

“Frank Ahlgren III earned millions buying and selling bitcoins,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.

He added, “But instead of paying the taxes he knew were due, he lied to his accountant about the extent of a large portion of his gains, and sought to conceal another chunk of his profits through sophisticated techniques designed to obscure his transactions on the bitcoin blockchain. That conduct today earned him a two-year sentence.”

“Ahlgren will serve time because he believed his cryptocurrency transactions were untraceable. This case demonstrates that no one is above the law,” said Acting Special Agent in Charge Lucy Tan of IRS-Criminal Investigation (IRS-CI)’s Houston Field Office.

“This case marks the first criminal tax evasion prosecution centered solely on cryptocurrency. As the prices for cryptocurrency are high, so is the temptation to not pay taxes on its sale. Avoid the temptation and avoid federal prison.”

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After ringing the bell at the New York Stock Exchange (NYSE) today, Donald Trump, the United States president-elect and famous felon, announced that he “will be doing something great with crypto.”

This was in response to a question from Jim Cramer that seemed to allude to a “strategic bitcoin reserve.” Trump has previously promised to create a “strategic national bitcoin stockpile.”

Elsewhere yesterday, World Liberty Financial, a crypto project endorsed by Trump that describes him as the “Chief Crypto Advocate,” has been diversifying the assets in its multisignature wallet, apparently exchanging USDC for ether, LINK, and AAVE.

The protocol itself intends to exist as an AAVE wrapper and it has already partnered with Chainlink.

Read more: Justin Sun buys more of Trump’s WLFI than it planned to sell

Interestingly, this change in the composition of the multisignature wallet was not discussed on the governance forum and was not voted on by tokenholders. This token was explicitly marketed as a “governance token.”

The firm has sold approximately 4.45 billion tokens, with nearly half of them going to Justin Sun, a crypto entrepreneur and the target of a SEC lawsuit that alleges he participated in unlawful promotion of securities and price manipulation.

Additionally, over 22 billion tokens — that’s five times the number that has been sold to the public — went to a Trump-affiliated firm. 

This firm also receives 75% of protocol revenue, despite the fact that Trump and his children are very explicitly not directors or employees of this firm.

Trump’s wife Melania, another cryptocurrency entrepreneur whose team has been accused of wash-trading her NFT collection, rang the NYSE bell several years ago.

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Recently, the Securities and Exchange Commission (SEC) settled with TrustToken and TrueCoin, previous operators of TrueUSD (TUSD), over allegations that the firms sent the backing for the stablecoin to “a speculative and risky offshore commodity fund.” 

The fund, which invested in “trade finance, structured trade, export finance, import finance, supply chain financing, and project financing of entities,” appeared to be offered by First Digital Trust in Hong Kong. Allegedly, “more than 99% of the assets backing TUSD” were placed in the speculative fund.

Furthermore, the complaint alleges that in 2022, TrueCoin and TrustToken were aware of redemption issues at this fund.

Importantly, this settlement didn’t include Techteryx, the firm that now owns TrueUSD. This firm has repeatedly denied that it’s under the control of Justin Sun, described as an “Asia markets advisor” for TrueUSD, though the former chief executive of TrustLabs has claimed that Sun tried to acquire the firm.

A review of an attestation for TrueUSD reveals that approximately 99.7% of the reserves for this stablecoin are still held at First Digital Trust, despite the allegations in the previous SEC settlement.

Read more: TrueUSD bank FlowBank forced into bankruptcy

The attestation further notes that Moore Hong Kong, the firm behind it, valued investments in that fund “at cost” and makes sure to note that its “procedures do not include an examination over the fair market value of the investments within the Fund.”

This means that even if the fair value of assets in that fund had fallen to zero, this attestation would continue to report the value at cost invested.

Additionally, the notes from Techteryx management signed by Jennifer Jiang (also of Sun-affiliated BiT Global, Sun-owned Poloniex, Sun-advised HTX, and Sun-owned BitTorrent), also state that these assets “may not be readily convertible to cash, subject to market conditions or fund performance.”

Currently, the reserves for the approximately $495 million in TUSD are made up of approximately $502 million held at First Digital and approximately $1 million in cash. 

Protos has reached out to TrueUSD to determine which fund it is currently invested in, but it did not immediately respond.

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World Liberty Financial, the cryptocurrency project endorsed by Donald Trump, has sold approximately 1.35 billion tokens, 2% of its original goal and approximately 68% of the revised target.

In the X (formerly Twitter) Spaces call where the Trump family endorsed this token, the team promised that 63 billion of the $WLFI token would be sold to the public.

This amount was cut to 35 billion in the ‘Gold Paper,’ which was cut to 20 billion on the website, and to 2 billion in Securities and Exchange Commission filings. Thirty-five billion is still listed in the token sale terms and conditions, and 20 billion is still listed on the website. 

Even with these incredible cuts to its target, World Liberty, which was endorsed by the sexual predator and fraudster, President-elect Trump, has yet to achieve its goal.

Read more: Trump-backed World Liberty Financial stumbles at launch, website goes offline

Intriguingly, a Dune dashboard developed by ‘Seoulcalibur.eth’ suggests that over 23% of the total sales have gone to just five wallets, with the largest holding over 193,000 tokens. 

Furthermore, the token has repeatedly misrepresented itself in its marketing, claiming to be a ‘governance’ token, despite the fact that 22.5 billion tokens — more than 10 times what will be sold to the public — have been allocated to a Trump-affiliated firm, meaning the public will never truly be able to influence governance. 

This Trump-affiliated firm is also expected to receive 75% of the revenue from the protocol if it ever launches. 

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President-elect Donald Trump has nominated Matt Gaetz to be the next attorney general of the United States. Gaetz is a former representative from Florida who was under investigation by the Department of Justice (DOJ) and House Ethics Committee for sexually trafficking minors and who took part in efforts to prevent votes from counting in 2020.

This nomination draws greater attention to the relationship between Gaetz and the crypto industry, a frequent target of the DOJ. 

Joel Greenberg

Joel Greenberg, the former Seminole County Tax Collector, was one of the individuals who was cooperating with the DOJ in its investigation of Gaetz. 

Greenberg, who is a long-time associate of Gaetz, admitted that he had paid a 17-year-old girl for sex. The New York Times reported that he told prosecutors that Gaetz also had sex with the girl. 

Greenberg has repeatedly found ways to integrate bitcoin and crypto into his criminal and unethical behavior. These activities include supposedly offering Roger Stone $250,000 in bitcoin in exchange for Stone advocating for a pardon for Greenberg. 

Additionally, Greenberg used public funds to purchase bitcoin mining machines, which he hooked up at a public building and subsequently lost in a fire.

Read more: Proud Boys ties to pro-crypto political consultant Samuel Armes

Furthermore, Greenberg regularly contracted Keith Ingersoll for work through the Seminole County Tax Collector’s Office. Ingersoll was one of the executives behind the Organic Fresh Coin scam, which was operated in cooperation with the late Mikhail Morgulis, an Honorary Consul of Belarus to the Florida Consulate. Ingersoll has been sentenced to nine years in prison for fraud.

Matt Gaetz’s crypto policies

Gaetz himself also has multiple policies that the cryptocurrency industry seems to support, receiving an A grade from Stand With Crypto. 

One of the things raising his grade is that Gaetz has proposed a bill that would require the Internal Revenue Service to accept bitcoin as payment for income taxes.

Additionally, he has supported the Financial Innovation and Technology for the 21st Century Act (FIT21) and has advocated against the Federal Reserve offering Central Bank Digital Currencies (CBDCs) to consumers. 

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Dog coin-loving crypto bros caused chaos for New York City’s dog mayoral election earlier this month when they interfered in the race to pump a meme coin named after one of the leading candidates.

According to its website, New York’s NYC Dog Mayor competition was “founded to create something fun and joyful for people at a time in which many are struggling; to provide a unique opportunity for NYC community development; and to present politics and civics in a positive, educational, and compelling way (for once.).”

So-called “doggy influencer” Bertram the Pomeranian, who has nearly 400,000 followers on Instagram, was already among the frontrunners to snatch victory.

However, his bid for the title was further boosted when holders of the namesake meme coin BERT began to employ underhand tactics to drum up voters and even discredit Bertram’s opponents.

This was done, according to one rival dog owner, “to pump their valueless shitcoin.”

Olivia Caputo , the owner of one of Bertram’s biggest rivals, Enzo the Shih Tzu, posted a lengthy statement via Instagram announcing her — and her dog’s — withdrawal from the mayoral race and explaining how it had “turned into a catalyst for spreading hate, negativity, and threats of violence towards Enzo.”

Read more: Trump sells DOGE shirts after Musk appointment, Dogecoin rally

Caputo alleges in her statement that BERT coin supporters were “offering payment/giveaways to sway people to vote for Bert,” and said that “the way they are speaking in their group chats indicates it’s clearly a pump and dump scheme, which people will ultimately suffer harm from.”

Caputo told The New York Times that she first became suspicious when, in a previous voting round, the number of votes being cast for Bertram saw a jump of more than 3,000 over the previous round.

She claimed that the increase happened at the same time as Bertram started to see increased support on social media and even financial incentives in return for votes.

She also claims to have seen Telegram chats in which Bertram’s supporters stated they would use the platform to “pump the price.”

The coin, which has been trading since mid-October, did experience a spike this week, jumping from $0.0017 on Tuesday to $0.054 on Thursday. This is despite Bertram dropping out of the race at the final stage, with his owner Kathy Grayson saying, “The whole thing has been in a way, darkly hilarious.”

“It has absorbed the anxiety facing people in human elections. People are getting worked up projecting all the human stuff,” she added.

The contest’s creator Stephen Calabria said, “Frankly, I had always envisioned this as a good faith and good-humored way to get shelter dogs adopted and to use this as a platform for good.”

He added, “If I never hear the word crypto again, it will be a blessing.”

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Certain members of the crypto community would love to wave goodbye to US Federal Reserve Chairman Jerome Powell when Donald Trump becomes president. The two men have sparred for years, and crypto promoters want to see Trump surrounded with loyalists who keep markets sailing smoothly.

Already assuming that Trump will find some way to oust Powell, potential candidates for his replacement are already circulating. Current top guesses include Scott Bessent, Kevin Warsh, Kevin Hassett, David Malpass, and Judy Shelton.

Powell and Trump famously clashed over interest rate policies in 2018 when Powell declared he was prepared to defend the Fed’s independence from the Executive branch in the courts. He further reminded reporters that Trump may not fire him.

Pundits speculated that Trump only backed off Powell in 2018 because his threats damaged confidence in an already shaky stock market.

Now that six years have passed since their last spat, Trump recently granted a conditional pledge to let Powell finish his term through 2026 “if I thought he was doing the right thing.”

Will Trump actually try to fire Jerome Powell?

From the crypto industry’s perspective, the earlier Powell leaves, the better. Lower interest rates, a bigger central bank balance sheet, and quantitative easing at the Fed are a recipe for booming markets.

Unfortunately, Powell is a moderate and has hiked interest rates by hundreds of basis points during Joe Biden’s term.

Incidentally, and important for context, Trump appointed Powell early in his first term as president. Granted, his 2016 appointment certainly does not mean that Trump will not try to interfere with Powell or his Fed governors during the 2025 presidency.

Indeed, Polymarket already brokers crypto-denominated bets that Trump will fire Powell within 100 days of taking office at a 7% odds rate.

How Trump would fire someone who claims the president may not fire him remains to be seen. Powell shows little interest in going anywhere without a fight. 

If Powell does depart, though, who would replace him? Below are some potentials.

Read more: Crypto promises that Donald Trump must now live up to

Scott Bessent

One of George Soros’ former chief investment officers, Bessent is already an economic adviser to Trump. He is keen to see Powell depart and has brazenly proposed a “shadow” Fed chair to effectively sideline Powell until his scheduled departure in 2026.

Bessent has been a generous Republican donor and Trump supporter. His Wall Street experience and conservative values could make him an appealing Fed chair candidate for Trump.

Kevin Warsh

Former Fed governor Warsh lost his bid for a job promotion in 2017 to Powell, but he is hoping for better chances this time. Warsh has close ties to Trump through his father-in-law Ronald Lauder, the Estée Lauder tycoon and longtime friend of Trump.

Warsh is married to Lauder’s daughter, Rachel.

Kevin Hassett

One of Trump’s former senior advisers, Hassett is a Trump loyalist with White House experience. His alignment with the incoming president and experience as chairman of the Council of Economic Advisers could give him favorable odds for a Fed chairman nomination.

David Malpass

Appointed by Trump to lead the World Bank, Malpass is an obvious candidate for Fed chair. His experience in international finance and personal connections with central bankers and sovereign wealth managers around the world give him instant credibility.

Judy Shelton

Trump tried to nominate Shelton to the Fed in 2020 without success, but he might try again next year. She’s a former economic advisor to Trump, a fan of the gold standard, and a staunch critic of Jerome Powell.

Her unconventional monetary policies and proven loyalty to Trump could cater to his desires to reshape the Federal Reserve and challenge traditional economic policies.

These six candidates are, of course, only a few names among many that conservatives have floated.

Will Jerome Powell’s successor be a pro-crypto Trump loyalist?

Powell has mixed views regarding digital assets. He once referred to bitcoin as digital gold even though he thought it was too volatile to ever replace the US dollar. He also once acknowledged bitcoin’s “staying power” while testifying before the House Financial Services Committee.

Nevertheless, his incidental comments have not calmed criticisms of his hawkish monetary policies. Crypto would prefer a pro-crypto chairperson who is a Trump loyalist. Anyone who is pro-stimmy will do.

If Trump tries to fire Powell, the two men will probably clash in a legal battle that will determine the president’s level of control over the ostensibly independent Federal Reserve.

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One dream pick for a crypto-friendly treasury secretary in Donald Trump’s second administration will not be happening, as prominent hedge fund manager John Paulson said today that he won’t be taking the job.

Speaking about his decision, Paulson said, “My complex financial obligations would prevent me from holding an official position.”

That admission is certainly true. For example, Paulson’s massive equity positions in government-sponsored enterprises Fannie Mae and Freddie Mac, whose profits are swept into the US Treasury, have more than doubled in price since Trump won re-election. His conflict of interest is certainly evident.

With Paulson dropping out of the race, other contenders for the position include Key Square Group’s Scott Bessent, Cantor Fitzgerald’s pro-Tether Howard Lutnick, Jay Clayton, and Jamie Dimon.

Read more: Crypto promises that Donald Trump must now live up to

Crypto advocates had pinned hope on Paulson

Some crypto proponents had initially viewed Paulson as an incoming ally in the world’s most powerful sovereign treasury. Despite his previous skepticism towards digital assets, optimism stemmed from Paulson’s reputation as a savvy investor who has proven allegiance to Trump for years.

Just as Trump pivoted from anti- to pro-crypto during his career, so too might have Paulson. Indeed, after a half dozen NFT collections, a DeFi project, and various pro-bitcoin promises, Trump has certainly re-branded himself as a pro-crypto leader.

Read more: Tether’s dreams come true with Donald Trump victory

Many in crypto believed that Paulson’s understanding of financial markets and his willingness to embrace unconventional economic policies could translate into a favorable regulatory environment for the class. His leadership at the 100,000+ employee treasury would have been a welcome reprieve from Janet Yellen’s anti-crypto reign.

They hoped his appointment might lead to policies that would encourage innovation in digital assets and support the growth of bitcoin and other cryptocurrencies.

Although offshore binary options markets like Polymarket do not indicate actual odds of success, Scott Bessent is currently the frontrunner for Trump’s Secretary among prediction market gamblers.

Although Paulson will not be the country’s next Treasury Secretary, other pro-crypto contenders like Bessent and Lutnick are next in line.

As the Biden-to-Trump transition process continues, the industry will be watching closely to see how treasury leadership affects digital assets during the second Trump administration.

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Fairshake and its affiliated Super PACs, Protect Progress and Defend American Jobs, were very active contributors to this election cycle, spending successfully across a variety of different races.

Protos used Federal Election Commission data compiled by OpenSecrets to help determine which states were the largest recipients of funds from these crypto industry-affiliated entities.

This approximately $133 million in spending was dominated by Ohio, where over $40 million was spent by Defend American Jobs to support the campaign of Republican Bernie Moreno, who has clinched the state’s Senate race.

Read more: Crypto promises that Donald Trump must now live up to

Other expensive races saw approximately $10 million used to oppose Katie Porter in the California Democratic Senate Primary, $10 million to support Democrat Elissa Slotkin in her successful Michigan race for the Senate, and slightly more than $10 million to support Democrat Ruben Gallego in his successful Arizona Senate run. 

Andreessen Horowitz, an important Silicon Valley venture capital firm, has already committed over $23 million to Fairshake and its affiliated Super PACs for the 2026 midterm cycle, ensuring crypto will remain an election issue. 

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An alleged SIM-swap hacker accused of stealing $400 million in crypto from collapsed exchange FTX has reportedly requested a temporary release from home detention on the grounds that he would like to attend his girlfriend’s sister’s birthday party at an Illinois branch of Chuck E. Cheese.

Robert Powell, aka ‘ElSwapo1’ was arrested alongside two alleged accomplices back in February and subsequently granted home release on a $10,000 bond.

Other conditions of his release included that he avoid non-essential internet use and any online gambling and that he must remain at home other than to go to court or medical appointments. 

However, in a request to the court, Powell’s lawyers have requested that it “modify his conditions of release” and allow him to attend his girlfriend’s sister’s birthday party on Sunday, November 10 between the hours of 2 pm and 6 pm at an Arlington Heights Chuck E. Cheese.

According to the request, “Mr. Powell has been in full compliance with all his release conditions,” and, “All other release conditions shall remain in effect.”

It also states that “Pretrial and the government are not objecting to this request.”

Read more: OKX SIM-swap leads to discovery of 2FA security flaw

Dates of $400M heist matched FTX loss

Powell, along with Carter Rohn and Emily Hernandez, were charged with conspiracy to commit wire fraud and conspiracy to commit aggravated identity theft and access device fraud after they allegedly traveled to cellphone stores in more than 15 states.

The trio, known as the ‘Powell SIM Swapping Crew’ were arrested after $400 million worth of crypto was siphoned from the (then) world’s biggest crypto exchange on the day that it declared bankruptcy in November 2022.

There was initially some debate about who exactly the gang’s victim was and the initial indictment referred to ‘Victim Company-1.’ However, blockchain analytics firm Elliptic subsequently clarified in a blog post that, “We’re not aware of any other thefts of this magnitude on these dates.”

“It therefore seems likely that ‘Victim Company 1’ is FTX,” it added.

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