- Pennsylvania man Waylon Wilcox faces up to six years in prison after pleading guilty to concealing over $13 million in CryptoPunks NFT sales income.
- Wilcox evaded approximately $3.2 million in taxes by failing to report sales of 97 CryptoPunks across 2021 and 2022.
- The IRS is increasingly focused on enforcing tax compliance for virtual currency and NFT transactions.
Waylon Wilcox, a 45-year-old Pennsylvania resident, has pleaded guilty to tax fraud after failing to report more than $13 million earned from selling CryptoPunks NFTs. According to the U.S. Attorney’s Office for the Middle District of Pennsylvania, Wilcox admitted in federal court on April 9 that he concealed income from 97 CryptoPunk transactions during 2021 and 2022, resulting in tax evasion exceeding $3.2 million.
Multimillion-Dollar NFT Sales Concealed from IRS
Court documents reveal that Wilcox sold 62 CryptoPunks in 2021, generating approximately $7.4 million, followed by another 35 sales in 2022 worth nearly $4.9 million. Despite these substantial transactions, Wilcox reportedly checked “no” when his tax returns asked whether he had disposed of any digital assets. Prosecutors state this misrepresentation allowed him to avoid paying $2.18 million in taxes for 2021 and an additional $1.09 million for 2022.
CryptoPunks, a collection of 10,000 algorithmically generated pixel characters, became one of the most valuable NFT series during the digital collectibles boom of 2021-2022. At their peak in August 2021, the minimum price for a CryptoPunk reached 125 ETH (approximately $479,000), according to CoinGecko. Though their value has since declined by about 85.7%, they still command significant prices, with a current floor price of 42.49 ETH (around $69,000).
IRS Targeting Crypto Tax Evasion
“IRS Criminal Investigation is committed to unraveling complex financial schemes involving virtual currencies and non-fungible token transactions designed to conceal taxable income,” said Yury Kruty, Philadelphia Field Office Special Agent in Charge, in an official statement.
The U.S. Attorney’s Office emphasized that taxpayers must report all proceeds and gains or losses from NFT sales on their tax returns. This case highlights increasing scrutiny from tax authorities on cryptocurrency and NFT transactions as these digital assets have become mainstream investment vehicles.
Wilcox’s charges could result in maximum penalties of six years imprisonment, supervised release, and substantial fines under federal law. The case serves as a stark reminder that despite the novelty of digital assets, traditional tax obligations still apply to these transactions.
Just last week, the volatility of the NFT market was further demonstrated when a CryptoPunks holder sold their NFT for $6 million, reportedly incurring a $10 million loss on the transaction.
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