Pennsylvania Man Who Made Millions Flipping NFTs Faces Charges After IRS Investigation

A Pennsylvania resident has pleaded guilty to federal charges after failing to report millions in earnings from trading non-fungible tokens (NFTs) to the IRS.

Waylon Wilcox, 45, admitted to filing false tax returns for 2021 and 2022, during which he underreported more than $13 million in income, mostly from trading 97 NFTs from the high-profile CryptoPunks collection.

Prosecutors say the bulk of the earnings came from 62 CryptoPunks sold in 2021, netting Wilcox approximately $7.4 million, according to a recent press release from the U.S. Attorney’s Office for the Middle District of Pennsylvania.

He earned an additional $4.9 million from selling 35 CryptoPunks the following year.

Wilcox Slashed $2.1M Off His IRS Tax Bill by Hiding NFT Profits, Prosecutors Say

Wilcox allegedly submitted a false return in April 2022 that significantly underrepresented his 2021 income, reducing his tax liability by over $2.1 million.

He repeated the maneuver in October 2023 for his 2022 filing, avoiding another $1.1 million in taxes.

In total, authorities say Wilcox underreported $8.5 million in 2021 and $4.6 million in 2022.

On both returns, he falsely answered “no” to questions about trading digital assets.

The Internal Revenue Service (IRS) and its Criminal Investigation Division led the probe, emphasizing that gains or losses from NFT transactions are taxable and must be reported.

“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,” said Yury Kruty, Special Agent in Charge of the IRS Philadelphia Field Office.

Wilcox now faces a maximum of six years in prison, along with supervised release and potential fines. His sentence will be decided by a federal judge based on statutory guidelines.

Wilcox Case Emerges Amid Ongoing NFT Market Decline

The case arrives as the NFT market experiences a noticeable downturn.

According to DappRadar, NFT trading volume in Q1 2025 declined 24% compared to the previous quarter.

Truth is market caps of the top NFT projects are tiny

Yet there are more than 50+ legacy IPs (multi-media franchises) that have each generated $10B+

Over $1,000,000,000,000 (trillion) in revenue will be disrupted by on-chain IPs

Web3 IP projects have not even scratched the… pic.twitter.com/xtpBpro1Hw

— trevor.btc (@TO) April 12, 2025

Last week alone, sales volume fell 4.7% to $94.7 million, continuing a slide from $102.8 million the week prior. User activity is also shrinking, with the number of buyers and sellers both down more than 75%.

Even premium collections like CryptoPunks are not immune. CryptoPunk #3100, one of only nine Alien Punks, recently sold at a $10 million loss, with the collection’s floor price now 67% below its 2021 peak.

Notably, the NFT market closed 2024 on a positive note with annual sales surpassing $8.83 billion, a 1.1% increase from 2023’s $8.7 billion, according to CryptoSlam data.

Ethereum and Bitcoin led the market, each generating $3.1 billion in sales, followed by Solana with $1.4 billion.

In total NFT sales, Ethereum remains dominant with $44.9 billion in all-time sales, trailed by Solana at $6.1 billion and Bitcoin at $4.9 billion.

Despite the slight recovery, 2024’s sales volumes were significantly lower than the market’s peak years.

NFT sales hit $15.7 billion in 2021 and soared to $23.7 billion in 2022, making 2024’s total a 43.9% and 62.8% decline from those peak periods.