Pennsylvania Man Who Made Millions Flipping NFTs Faces Charges After IRS Investigation

Ruholamin Haqshanas is a contributing crypto writer for CryptoNews. He is a crypto and finance journalist with over four years of experience.

A Pennsylvania man has pleaded guilty to federal charges after failing to report millions of dollars in earnings from trading non-fungible tokens (NFTs) to the Internal Revenue Service (IRS).

Waylon Wilcox, 45, admitted to filing false tax returns for 2021 and 2022, during which he underreported more than $13 million in income, mostly from trading 97 NFTs from the high-profile CryptoPunks collection.

The bulk of the earnings came from 62 CryptoPunks sold in 2021, which generated approximately $7.4 million for Wilcox, according to a recent press release from the U.S. Attorney’s Office for the Middle District of Pennsylvania.

He earned an additional $4.9 million from selling 35 CryptoPunks the following year.

Wilcox Slashes $2.1M Off His IRS Tax Bill by Hiding NFT Profits, Prosecutors Say

According to the government, Wilcox submitted a false return in April 2022 that massively understated his 2021 income and reduced his tax liability by over $2.1 million.

He repeated the maneuver in October 2023 for his 2022 filing, avoiding another $1.1 million in taxes.

In total, authorities say that Wilcox understated his income by $8,548,101 for 2021 and $4,614,488 for 2022.

On both returns, he answered “no” to questions about trading digital assets.

The IRS and its Criminal Investigation Division investigated the case and highlighted that gains or losses from NFT transactions are taxable and must be reported.

“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,” said Yury Kruty, Special Agent in Charge of the IRS Philadelphia Field Office. “The fact that a taxpayer would purposely try to evade paying taxes on millions of dollars in income is a blatant disregard for the law.”

Wilcox now faces a maximum of six years in prison, supervised release, and potential fines. His sentence will be decided by a federal judge based on statutory guidelines and the Federal Sentencing Guidelines.

The case began after a joint investigation by IRS Criminal Investigation and the Internal Revenue Service, Harrisburg Small Business / Unpaid Tax Score: 0

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