NFT trader Waylon Wilcox pleads guilty to underreporting nearly $13 million in profits from CryptoPunk NFT sales

Waylon Wilcox has pleaded guilty to underreporting nearly $12 million in profits from trading CryptoPunk NFTs. The Pennsylvania resident now faces up to six years in prison after admitting to filing false tax returns in 2021 and 2022.

An NFT trader has pleaded guilty to filing false tax returns where he vastly underreported nearly $13 million in profits from trading CryptoPunk NFTs.

The Pennsylvania resident, Waylon Wilcox, faces up to six years in prison after admitting to fabricating income figures and reducing his tax bill by millions over two years.

The 43-year-old trader sold 62 CryptoPunk NFTs in 2021, earning around $7.4 million and an additional $4.9 million from 35 sales in 2022, Federal prosecutors said.

However, Wilcox reported substantially lower income amounts to the Internal Revenue Service (IRS).

How False Tax Filings Hid Millions in CryptoPunk Gains

In April 2022, Wilcox filed a false return for 2021, underreporting $8.5 million in income and reducing his tax bill by about $2.1 million.

The trader also reported net income of about $1 million, whereas his true income was over $9.6 million for the year, according to court documents.

In October 2023, Wilcox again filed a false return where he underreported $4.6 million in income for 2022 and avoided roughly $1.1 million in taxes.

According to the U.S. prosecutors, Wilcox intentionally answered “no” when asked if he engaged in digital asset transactions despite actively buying and selling 97 CryptoPunk NFTs.

Wilcox pleaded guilty April 9 to two counts of filing false returns. The charges carry a maximum sentence of six years in prison, supervised release, and fines. A sentencing date has not yet been set.

IRS Criminal Investigation division remains dedicated to uncovering complex financial schemes involving virtual currencies, said Yury Kruty, Special Agent in Charge of the IRS Philadelphia Field Office.

Since January 2024, centralized crypto exchanges have been required to report users’ sales and trades to the IRS.

In a separate development, former President Donald Trump recently signed a resolution overturning a rule that would have required decentralized finance (DeFi) platforms to report transactions by 2027.