- CryptoPunk NFT trader Waylon Wilcox has pleaded guilty to underreporting $13 million in income, evading approximately $3.3 million in taxes.
- According to federal authorities, the case marks the first major U.S. tax evasion prosecution involving NFT sales.
- Wilcox sold 97 CryptoPunks during the 2021–2022 NFT boom but failed to report the earnings to the IRS.
A Pennsylvania man has pleaded guilty to underreporting millions of dollars in income from NFT sales, marking what officials say is the first significant U.S. tax evasion case tied to non-fungible tokens (NFTs).
CryptoPunk NFT Sales at the Center of Tax Fraud Case
The U.S. Attorney’s Office for the Middle District of Pennsylvania said that Waylon Wilcox, a 45-year-old man from Dillsburg, admitted to failing to report proceeds from 97 CryptoPunk NFTs sold in 2021 and 2022. According to him, Wilcox earned over $13 million from the transactions but never paid more than $3.3 million in federal taxes by not reporting them on his tax returns.
The guilty plea comes days before the April 15 federal tax filing deadline. The IRS has stated that gains from virtual currency sales, such as NFTs, must be reported and are subject to capital gains tax.
“This case highlights our commitment to exposing complex financial schemes involving digital assets,” said Yury Kruty, Special Agent in Charge of the IRS Criminal Investigation’s Philadelphia Field Office. “In today’s economic environment, it’s more important than ever that the American people feel confident that everyone is playing by the rules and paying the taxes they owe.”
According to the local news outlet Daily Voice, at the time of his NFT windfall, Wilcox’s girlfriend pled for donations on Facebook to help with the fees for his NFT daughter’s beauty pageant participation.
Wilcox was left facing a maximum prison sentence of six years. But that plea of guilt is likely to cut radically into the prisoner’s sentence.
CryptoPunk Market Remains Resilient Despite Sales Decline
The NFT sales occurred during the height of the NFT market boom. While overall trading volume has declined sharply, CryptoPunks, created by Larva Labs and now owned by Yuga Labs, remains the largest NFT project by market capitalization, according to data from CoinGecko. Some recent high-value sales have resulted in steep losses, with one CryptoPunk recently selling for $10 million less than its previous purchase price.
Yuga Labs has not commented on the case and maintains a distance from individual CryptoPunk transactions. CryptoPunks, one of the earliest and most iconic NFT collections, has maintained its status as the top project by market capitalization despite fluctuations in market sentiment and Ethereum’s value.
Yuga Labs Faces Backlash Over Super Punk World Spin-off
But in May 2023, the very name of Yuga Labs, now owner of the CryptoPunk intellectual property from Larva Labs, made headlines when it launched the CryptoPunk spinoff Super Punk World. The community criticized the move as it deviated from what CryptoPunks were set out to do.
This is in response to the backlash, and in keeping with his word, Yuga Labs CEO Greg Solano promised that the company would no longer develop or modify the collection.
“CryptoPunks will just be decentralized and preserved on the blockchain,” Solano said. “The only thing we intend to do is support a few museums and institutions in their quest to acquire a Punk and help educate their audience about them.”
Since then, Yuga Labs has maintained a hands-off approach to the CryptoPunk collection, focusing instead on preserving its cultural and historical value within the broader NFT ecosystem.
