{"id":21856,"date":"2025-04-13T11:46:52","date_gmt":"2025-04-13T11:46:52","guid":{"rendered":"https:\/\/dogewisperer.com\/?p=21856"},"modified":"2025-04-13T11:46:52","modified_gmt":"2025-04-13T11:46:52","slug":"nft-trader-faces-prison-for-13m-tax-fraud-on-cryptopunk-profits","status":"publish","type":"post","link":"https:\/\/dogewisperer.com\/?p=21856","title":{"rendered":"NFT trader faces prison for $13M tax fraud on CryptoPunk profits"},"content":{"rendered":"
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A non-fungible token (NFT) trader could face up to six years in prison after pleading guilty to underreporting nearly $13 million in profits from trading CryptoPunks, according to the US Attorney\u2019s Office for the Middle District of Pennsylvania.<\/p>\n

Waylon Wilcox, 45, admitted to filing false income tax returns for the 2021 and 2022 tax years. The former CryptoPunk investor pleaded guilty on April 9 to two counts of filing false individual income tax returns<\/a>, federal prosecutors said in an April 11 press release<\/a>.<\/p>\n

Back in April 2022, Wilcox filed a false individual income tax return for the tax year 2021, which underreported his income tax by roughly $8.5 million and reduced his tax due by approximately $2.1 million.<\/p>\n

In October 2023, Wilcox filed another false individual tax income return for the fiscal year of 2022, underreporting his income tax by an estimated $4.6 million and reducing his tax due by nearly $1.1 million.<\/p>\n

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Wilcox pleads guilty to false tax filing, press release. Source: <\/em>Attorney\u2019s Office for the Middle District of Pennsylvania<\/em><\/a><\/p>\n<\/figcaption><\/figure>\n

\u201cThe total maximum penalty under federal law for these offenses is up to six years of imprisonment, a term of supervised release following imprisonment, and a fine,\u201d according to the statement. However, the exact details and timing of his sentence remain unclear.<\/p>\n

Related: <\/strong><\/em>NFT trader sells CryptoPunk after a year for nearly $10M loss<\/strong><\/em><\/a><\/p>\n

The trader bought and sold 97 pieces of the CryptoPunk NFT collection, the industry\u2019s largest NFT collection, with a $687 million market capitalization.<\/p>\n

\"Cryptocurrencies,
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Source: <\/em>CryptoPunks<\/em><\/a><\/p>\n<\/figcaption><\/figure>\n

In 2021, Wilcox sold 62 CryptoPunk NFTs for a gain of about $7.4 million but reported significantly less on his taxes. In 2022, he sold 35 more CryptoPunks for $4.9 million. The Department of Justice said Wilcox intentionally selected \u201cno\u201d when asked if he had engaged in digital asset transactions on both filings.<\/p>\n

\u201cIRS Criminal Investigation is committed to unraveling complex financial schemes involving virtual currencies and NFT transactions designed to conceal taxable income,\u201d Philadelphia Field Office Special Agent in charge Yury Kruty said, adding:\u00a0<\/p>\n

\u201cIn today\u2019s economic environment, it\u2019s more important than ever that the American people feel confident that everyone is playing by the rules and paying the taxes they owe.\u201d\u00a0<\/p><\/blockquote>\n

The case was investigated by the Internal Revenue Service (IRS) and the Criminal Investigation Department.<\/p>\n

Related: <\/strong><\/em>CZ claps back against \u2018baseless\u2019 US plea deal allegations<\/strong><\/em><\/a><\/p>\n

Crypto tax rules gain traction<\/h2>\n

Crypto tax laws attracted interest worldwide in June 2024 after the IRS issued a new crypto regulation<\/a> making US crypto transactions subject to third-party tax reporting requirements for the first time.<\/p>\n

Since January, centralized crypto exchanges (CEXs)<\/a> and other brokers have been required to report the sales and exchanges of digital assets, including cryptocurrencies.<\/p>\n

On April 10, US President Donald Trump signed a joint congressional<\/a> resolution to overturn a Biden administration-era legislation that would have required decentralized finance (DeFi)<\/a> protocols to also report transactions to the IRS.<\/p>\n

Set to take effect in 2027, the so-called IRS DeFi broker rule<\/a> would have expanded the tax authority\u2019s existing reporting requirements<\/a> to include DeFi platforms<\/a>, requiring them to disclose gross proceeds from crypto sales, including information regarding taxpayers involved in the transactions.<\/p>\n

However, some crypto regulatory advisers believe that stablecoin and crypto banking legislation<\/a> should be a priority above new tax legislation in the US.<\/p>\n

A \u201ctailored regulatory approach\u201d for areas including securities laws and removing \u201cobstacles in banking\u201d is a priority for US lawmakers with \u201cmore upside\u201d for the industry, Mattan Erder, general counsel at layer-3 decentralized blockchain network Orbs, told Cointelegraph.<\/p>\n