CryptoPunks, the iconic NFTs that represent pixelated avatars, have become a major sensation in the digital art world. However, this high-value trend has also caught the eye of tax authorities, as one individual is learning the hard way.
A Pennsylvania resident recently pleaded guilty to federal tax evasion after failing to report over US$13 million in income earned from selling nearly 100 CryptoPunk NFTs. This marks what seems to be the first major U.S. tax evasion case involving non-fungible tokens (NFTs), and it’s sending a clear message: the IRS is watching.
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The Tax Evasion Scheme
Waylon Wilcox, 45, from Dillsburg, Pennsylvania, sold 97 CryptoPunks between 2021 and 2022. These sales generated millions in profits, but Wilcox failed to report these transactions on his tax filings. By omitting the sales, Wilcox avoided paying approximately US$3.3 million in taxes, as per the U.S. Attorney’s Office for the Middle District of Pennsylvania.
Guilty Plea and the IRS Crackdown
The timing of Wilcox’s guilty plea is notable—he entered it just before the IRS’s April 15 tax filing deadline. According to IRS guidelines, any sale of digital assets, including NFTs, is considered a taxable event, and the gains must be reported. Wilcox’s failure to report was not accidental, as the IRS believes he deliberately concealed the transactions.
Special agent Yury Kruty of the IRS Criminal Investigation team emphasized the agency’s commitment to investigating complex financial schemes involving virtual currencies and NFTs. Kruty stated, “IRS Criminal Investigation is committed to unraveling complex financial schemes involving virtual currencies and non-fungible token (NFT) transactions designed to conceal taxable income.”
The Drama Unfolds
The case grew even more interesting when it was reported that Wilcox’s girlfriend had used Facebook to seek donations for her daughter’s beauty pageant expenses, all while Wilcox was allegedly sitting on millions of untaxed NFT profits. Court documents suggest that Wilcox deliberately avoided paying taxes, and this led to the criminal investigation.
Wilcox now faces up to six years in prison for his tax crimes. However, given that he has pleaded guilty, he may receive a lighter sentence, as per federal guidelines. His sentencing has yet to be scheduled, but it’s clear that this case is making waves across the digital asset space.
IRS on High Alert: NFTs Are Under Scrutiny
With this case making headlines, the IRS has sent a loud and clear message: if you are hiding gains from NFT transactions, you will be caught. As Kruty put it, “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.” This indicates that the IRS is intensifying its focus on virtual currencies and NFTs, making sure that tax laws are being followed by all.
CryptoPunks: Still a Hot Commodity in 2025
Despite the tax scandal, CryptoPunks remain one of the most valuable NFT collections by market capitalization. While Ethereum-denominated prices have seen a slight increase over the past six months, the weaker ETH-to-USD conversion means the actual dollar value has only slightly budged. From $66,900, the price has risen to approximately $69,800.
While the NFT market has cooled off, CryptoPunks continue to hold a unique place in the digital art world as the original blue-chip asset. Even as controversies and scandals arise, CryptoPunks remain a symbol of high-value digital art, and they’ve retained their status in the market.
The Role of Yuga Labs in CryptoPunks’ Legacy
Yuga Labs, the company behind the Bored Ape Yacht Club, now owns the CryptoPunks intellectual property. However, after a wave of controversy surrounding their “Super Punk World” spin-off collection, Yuga Labs has shifted its approach. CEO Greg Solano confirmed that the company would preserve the original CryptoPunks on-chain and focus on educational efforts through museums. This move reflects Yuga Labs’ desire to maintain CryptoPunks as a cornerstone of digital art history, without stepping into further controversy.
Conclusion: A Wake-Up Call for NFT Traders and Collectors
The case of Waylon Wilcox sends a clear and important message: the IRS is closely monitoring NFT transactions, and the days of operating in a regulatory grey zone are over. As the NFT boom fades into the past, tax authorities are tightening their grip on the digital asset space.
For NFT traders and collectors, it’s now more crucial than ever to stay on top of tax reporting. This case may be the first major tax evasion case involving NFTs, but it definitely won’t be the last. If you’re holding or trading NFTs, now is the time to ensure that your gains are properly reported to avoid any future legal trouble.
The world of NFTs is evolving, and so too are the laws surrounding them. Stay informed, report your earnings, and ensure you’re playing by the rules. The IRS is paying attention, and the consequences of evading taxes can be severe.
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