Crypto and NFT Tax Evasion? Think Again — Jail Time Is Real

A Pennsylvania resident has pleaded guilty to filing false tax returns after failing to report more than $13 million in income from the sale of CryptoPunks, a popular NFT collection. The misrepresentation allowed him to avoid over $3.2 million in federal taxes, according to prosecutors.

Waylon Wilcox, 45, admitted in federal court on April 9 to deliberately underreporting proceeds from 97 NFT transactions made during the peak of the digital collectibles boom in 2021 and 2022. Court documents show that he sold 62 CryptoPunks in 2021 for approximately $7.4 million, and an additional 35 in 2022 for nearly $4.9 million.

Despite these substantial profits, Wilcox checked “no” on his tax filings when asked if he had sold any digital assets during those years.

Prosecutors say this false reporting led to tax shortfalls of $2.18 million in 2021 and $1.09 million in 2022.

“IRS Criminal Investigation is committed to unraveling complex financial schemes involving virtual currencies and non-fungible token transactions designed to conceal taxable income,” said Yury Kruty, Special Agent in Charge of the IRS 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.”

CryptoPunks, a set of 10,000 algorithmically generated pixel avatars, became one of the most iconic NFT collections during the speculative surge of 2021. At their peak in August of that year, even the least expensive Punks sold for upwards of $479,000, though prices have since dropped significantly.

As of April 2025, the collection’s floor price sits below $70,000.

The U.S. Attorney’s Office for the Middle District of Pennsylvania reminded taxpayers that all NFT transactions—including gains or losses—must be disclosed on annual tax returns.

Wilcox now faces a maximum sentence of six years in prison, as well as a potential fine and a term of supervised release under federal sentencing guidelines.