NFT Trader Faces Prison for Hiding Millions in CryptoPunk Profits from IRS

A former NFT trader is facing potential prison time after admitting to hiding millions in profits from the IRS through undeclared sales of high-value digital assets.

Waylon Wilcox entered a guilty plea on April 9 to charges of filing false tax returns for 2021 and 2022. According to federal prosecutors in Pennsylvania, Wilcox failed to report nearly $13 million in income earned from trading CryptoPunks—one of the most valuable NFT collections in the world.

In 2021 alone, Wilcox made around $7.4 million from selling 62 CryptoPunks, but reported far less on his tax filings.

The pattern continued in 2022 when he sold another 35 pieces from the same collection for $4.9 million, again misrepresenting his earnings to the IRS. In both tax returns, Wilcox falsely stated that he had not participated in any digital asset transactions.

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Authorities say Wilcox’s actions led to over $3 million in unpaid taxes across the two years. If convicted under federal sentencing guidelines, he could serve up to six years in prison, though the final outcome will depend on the court’s decision.

The IRS, which investigated the case along with its Criminal Investigation Division, emphasized its ongoing efforts to crack down on tax evasion involving digital assets. Officials noted that transparency and fairness in the tax system are critical, especially as crypto-related activity grows.

The case highlights how regulators are increasing scrutiny on crypto traders who fail to comply with tax laws, particularly as NFT markets continue to mature.

Alexander Stefanov