NFT trader faces prison for $13M tax fraud on CryptoPunk profits
A non-fungible token (NFT) trader could spend up to six years behind bars after pleading guilty to underreporting nearly **$13 million in profits** from trading **CryptoPunk NFTs**, according to a statement from the U.S. Attorney’s Office for the Middle District of Pennsylvania.
**Waylon Wilcox**, 45, admitted to filing false income tax returns for the **2021 and 2022 tax years**. On **April 9**, he pleaded guilty to two counts of filing false individual income tax returns, federal prosecutors announced in an **April 11 press release**.
Wilcox’s fraudulent tax filings stem from significant NFT trading activity. In **April 2022**, he filed a false tax return for 2021, underreporting **$8.5 million in income**, which slashed his tax liability by around **$2.1 million**. In **October 2023**, he submitted another false return for 2022, underreporting **$4.6 million**, resulting in an additional **$1.1 million** in unpaid taxes.
The charges relate to Wilcox's active involvement in the **CryptoPunk NFT collection**, one of the most valuable and iconic NFT series with a market cap of around **$687 million**. He bought and sold **97 CryptoPunk NFTs**, including **62 NFTs in 2021**, netting roughly **$7.4 million**, and **35 NFTs in 2022**, generating **$4.9 million**.
Despite these substantial gains, Wilcox falsely checked “no” on both tax filings when asked whether he had engaged in digital asset transactions.
> “IRS Criminal Investigation is committed to unraveling complex financial schemes involving virtual currencies and NFT transactions designed to conceal taxable income,” said **Yury Kruty**, Special Agent in Charge at the IRS Criminal Investigation Philadelphia Field Office.
According to federal law, Wilcox faces a **maximum penalty of six years in prison**, supervised release, and a **significant monetary fine**. The final sentencing date has not yet been announced.
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### **Growing Scrutiny on Crypto Taxes in the U.S.**
This case underscores the U.S. government’s intensifying focus on crypto tax compliance. In **June 2024**, the **IRS introduced new reporting rules** requiring third-party brokers and centralized exchanges (CEXs) to report all crypto transactions.
Further regulatory debate followed when **President Donald Trump** signed a resolution on **April 10, 2025**, overturning a Biden-era rule that would have compelled **decentralized finance (DeFi) platforms** to report crypto sales starting in **2027**.
Some industry experts believe crypto tax regulation should be paired with a broader framework for digital asset legislation. **Mattan Erder**, general counsel at **Orbs**, a decentralized blockchain network, emphasized the need to prioritize **stablecoin rules and crypto banking access** over newer tax laws.