Waylon Wilcox, a 45-year-old resident of Pennsylvania, has pleaded guilty in federal court to deliberately concealing over $13 million in income earned from the sale of CryptoPunks NFTs.
According to the U.S. Attorney’s Office for the Middle District of Pennsylvania, Wilcox failed to report 97 high-value NFT transactions that occurred between 2021 and 2022, resulting in approximately $3.2 million in unpaid federal income taxes.
He earned around $7.4 million in 2021 and another $4.9 million in 2022, yet none of these figures were disclosed on his tax returns.
The case underscores growing concerns around tax evasion within the rapidly evolving NFT sector, where digital anonymity and decentralized platforms can obscure substantial earnings.
NFT Boom Enabled Massive Unreported Gains
The profits Wilcox failed to report were largely the result of a historic boom in the NFT market, particularly from the sale of CryptoPunks, a highly coveted collection of 10,000 unique, pixelated avatars.
These NFTs became cultural icons during the 2021 digital art craze, with some individual pieces selling for hundreds of thousands of dollars.
Wilcox capitalized on this surge by executing dozens of lucrative sales during the peak of market mania.
In 2021 alone, his failure to report income led to $2.18 million in tax evasion, followed by $1.09 million in 2022.
Although the NFT market has cooled considerably since then, the profits earned during its peak were substantial enough to trigger a federal investigation and subsequent legal action.
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IRS Signals Aggressive Enforcement in Digital Asset Sector
Federal prosecutors and the IRS are using this case as a high-profile example to emphasize that tax obligations apply equally to digital and traditional assets.
Yury Kruty, Special Agent in Charge of the IRS Criminal Investigation’s Philadelphia Field Office, reiterated the agency’s commitment to enforcing tax laws uniformly across all asset classes.
He stated that “everyone must play by the same rules,” sending a clear message that blockchain transactions, despite their digital and decentralized nature, are subject to strict regulatory scrutiny.
Authorities stressed that concealing earnings from NFTs, cryptocurrencies, or other digital assets is a prosecutable offense, and similar enforcement actions are likely to follow as the sector continues to grow.
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Wilcox Faces Severe Legal and Financial Repercussions
With his guilty plea, Wilcox is now subject to a maximum prison sentence of six years, as well as significant financial penalties.
In addition to possible incarceration, he may be ordered to pay full restitution for the taxes he failed to pay.
The court may also impose a period of supervised release upon the completion of any prison term.
His case stands as a warning to digital investors who may wrongly believe that blockchain anonymity shields them from legal consequences.
As regulatory agencies invest in better tools to track crypto and NFT transactions, the likelihood of detection and prosecution for non-compliance continues to rise.
Wider Implications for NFT Regulation and Market Stability
The Wilcox case comes amid a series of global events that highlight both the legal uncertainties and technological vulnerabilities surrounding the NFT ecosystem.
In Brazil, a court recently authorized the use of NFTs to serve legal subpoenas in a $900 million crypto fraud case, underscoring the expanding legal utility of blockchain tools.
Meanwhile, security firm CertiK has warned of a newly discovered exploit targeting NFT marketplaces via 0-fee flash loans and smart contract manipulation.
Additionally, major NFT platform X2Y2 announced it will shut down on April 30 due to a 90% drop in trading volume, citing a strategic pivot toward AI.
These developments collectively mark a turning point for the NFT industry, where stronger regulations, improved security protocols, and clearer tax compliance are becoming non-negotiable standards for survival and legitimacy.
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