NFT trader faces prison for $13m tax fraud on CryptoPunk profits
NFT trader faces up to six years
Waylon Wilcox, 45, a prominent NFT trader specializing in CryptoPunk transactions, has pleaded guilty to filing false income tax returns for the 2021 and 2022 tax years, according to the U.S. Attorney’s Office for the Middle District of Pennsylvania.
Wilcox’s false filings underreported his profits from trading CryptoPunk NFTs by nearly $13 million. In 2021, he sold 62 CryptoPunk NFTs, realizing a profit of approximately $7.4 million; in 2022, he sold 35 more NFTs for an additional $4.9 million. In his 2021 tax return, Wilcox underreported his income by around $8.5 million, reducing his tax liability by roughly $2.1 million. Similarly, his 2022 return underestimated his income by an estimated $4.6 million, cutting his tax due by nearly $1.1 million, reports Cointelegraph.
Legal consequences and market implications
Federal prosecutors have warned that if convicted on all counts, Wilcox faces a maximum penalty of up to six years in prison, followed by a period of supervised release, along with substantial fines. Special Agent Yury Kruty of the Philadelphia Field Office emphasized that the IRS Criminal Investigation is dedicated to unraveling intricate financial schemes that use digital asset transactions to conceal taxable income. Wilcox’s case is a stark reminder of the tightening regulatory environment in the crypto space, as authorities intensify efforts to bring transparency to NFT transactions.
The case also highlights the evolving scrutiny over digital asset trading, particularly within high-profile NFT markets like the CryptoPunk ecosystem, which has garnered a market capitalization of over $687 million. As regulators and market participants grapple with the implications of digital asset taxation, this case may serve as a bellwether for future enforcement in the NFT arena. Moving forward, investors and industry stakeholders will closely monitor whether similar schemes are exposed and how these enforcement actions impact market confidence and the broader crypto ecosystem.
Meanwhile, NFT sales have declined despite a significant spike in Ethereum activity.
