Waylon Wilcox, a Conshohocken, Pennsylvania man, pleaded guilty to multiple counts of filing false tax returns. He neglected to report the hundreds of millions in income he made from selling CryptoPunk NFTs. Wilcox now faces the prospect of many years in a federal prison, supervised release, and up to $500,000 in fines.
Wilcox pleaded guilty to willfully failing to report his income to the Internal Revenue Service (IRS) for the tax years 2021 and 2022. During this time, he liquidated 97 CryptoPunks for a total of $7.4 million and $4.9 million on a realized basis.
CryptoPunks first made waves in 2017 as one of the earliest series of 10,000 unique, pixelated avatars. They rapidly enthralled the NFT market and became a sensational craze. As such, as a digital art series, CryptoPunks took off, with individual pieces selling for millions of dollars. Just in the last few months, two individual CryptoPunks were sold for $6.1 million and $2.33 million.
Big sales have both revealed the richness of the collection and underscored its value. A CryptoPunk sold for $11.8 million at Sotheby’s in June 2021, and a group of nine CryptoPunks sold for $17 million at Christie’s in May 2021. The floor price of CryptoPunks is available on nftpricefloor.com.
When a taxpayer sells an NFT, including a Punk, then the taxpayer must report sales proceeds and any gains or losses from the sale of the NFT on their tax return. - The Justice Department
Wilcox now faces a maximum penalty of six years in prison for filing the false tax returns.
