If the 999,999 were worthless at the time they were initially transferred, then there is no taxable event. Now if they become worth $1 each and he sells them a

If the 999,999 were worthless at the time they were initially transferred, then there is no taxable event. Now if they become worth $1 each and he sells them at that price then it is a taxable event. The threshold may have changed with respect to gifts but if the coins were worth $1 at the time they were initially transferred there may be a taxable event, I think it used to be $50k was tax free.