Man Pleads Guilty to Hiding $13M in CryptoPunks Profits from IRS, Faces Prison
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A Pennsylvania man has pleaded guilty to filing fraudulent tax returns after failing to report millions in profits from selling digital artwork during the NFT boom.
Waylon Wilcox, 45, of Dillsburg, appeared in federal court on April 9 and admitted to underreporting his income by more than $13 million across the 2021 and 2022 tax years. The plea, entered before Senior U.S. District Judge Malachy E. Mannion, included two counts of filing false income tax returns—charges that could result in up to six years behind bars.
Federal prosecutors say Wilcox’s undeclared earnings came from selling 97 NFTs from the CryptoPunks collection, a set of 10,000 unique, algorithmically generated pixel-art characters that became synonymous with the digital collectibles craze of 2021. Each Punk functioned as an NFT, with verifiable ownership recorded on the Ethereum blockchain.
Court filings show that Wilcox made approximately $7.4 million from the sale of 62 Punks in 2021, and another $4.9 million from 35 Punks sold in 2022. Despite the sizable windfall, Wilcox allegedly answered “no” to questions on both of his federal tax returns about whether he had received or sold any digital assets.
According to the U.S. Attorney’s Office for the Middle District of Pennsylvania, the omissions slashed his federal tax obligations by over $3.2 million—$2.18 million in 2021 and $1.09 million in 2022.
A Pennsylvania man could face up to 6 years in prison after pleading guilty to hiding $13M in CryptoPunks profits from the IRS.
— nft now (@nftnow) April 14, 2025
Waylon Wilcox failed to report NFT sales in 2021–22, dodging over $3.2M in taxes, according to the DOJ. pic.twitter.com/rKxjVii39I
“IRS Criminal Investigation is committed to unraveling complex financial schemes involving virtual currencies and non-fungible token (NFT) transactions designed to conceal taxable income,” said Philadelphia field office special agent in charge Yury Kruty in a press release. “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.”
Though the CryptoPunks collection has seen its floor prices fall from highs of nearly half a million dollars to under $70,000 today, the IRS and Department of Justice are sending a strong message that enforcement is ramping up in the Web3 space.
Under U.S. tax law, proceeds from the sale of NFTs must be reported as capital gains or losses. The IRS has updated tax forms to explicitly ask filers whether they engaged in digital asset transactions—making false answers grounds for prosecution.
The case was investigated by the IRS Criminal Investigation division and is being prosecuted by Assistant U.S. Attorney David C. Williams. Sentencing will be determined at a later date, in accordance with federal guidelines.
If convicted, Wilcox faces not only potential imprisonment, but also supervised release and a hefty financial penalty.
Editor’s note: This article was written by an nft now staff member in collaboration with OpenAI’s GPT-4o.
