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- NFT trader Waylon Wilcox failed to report $13M in NFT profits over two years.
- IRS says he falsely claimed no digital asset transactions.
- Wilcox faces up to six years in prison and hefty fines.
NFT trader Waylon Wilcox has pleaded guilty to underreporting nearly $13 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.
According to the Federal prosecutors, Wilcox sold 62 CryptoPunk NFTs in 2021, earning around $7.4 million and an additional $4.9 million from 35 sales in 2022. Yet, he reported substantially lower income amounts to the Internal Revenue Service (IRS).
Related: No Crypto Tax? White House ‘Czar’ Shoots Down Transaction Fee
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. In a repeat of his earlier move, Wilcox repeated this underreporting in October 2023. 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. This was despite his active involvement in 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. However, a sentencing date has not yet been set.
IRS Cracks Down on Crypto Tax Fraud
The IRS Criminal Investigation division remains dedicated to uncovering complex financial schemes involving virtual currencies, according to 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.
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