rewrite this title CryptoPunk NFT Investor Faces Prison for $13M Tax Fraud in the U.S. – Metaverseplanet.net

A U.S.-based NFT investor, Waylon Wilcox, has admitted to concealing nearly $13 million in income from trading CryptoPunk NFTs, leading to criminal charges of tax fraud. According to the U.S. Attorney’s Office for the Middle District of Pennsylvania, Wilcox could face up to six years in federal prison.

Millions in Undeclared Gains from NFT Sales

The 45-year-old investor filed false federal income tax returns for the years 2021 and 2022, omitting millions in earnings from NFT trades. On April 9, Wilcox pled guilty to two counts of filing fraudulent tax returns. Just two days later, federal prosecutors made the case public.

In April 2022, Wilcox filed a return for the 2021 tax year, hiding approximately $8.5 million in income and evading around $2.1 million in taxes. Later, in October 2023, he submitted another false return for the 2022 tax year, underreporting $4.6 million in gains and dodging an additional $1.1 million in taxes.

Linked to Top NFT Collection: CryptoPunks

Wilcox was an active investor in CryptoPunks, one of the most valuable NFT collections globally, with a market cap of $687 million. Records show that he conducted 97 transactions, selling 62 CryptoPunk NFTs for $7.4 million in 2021 and 35 more for $4.9 million in 2022. In both tax years, Wilcox falsely indicated that he had no involvement in digital asset transactions.

According to the U.S. Department of Justice, he deliberately answered “no” to questions regarding participation in crypto asset trades, a move that contributed to his fraudulent filings.

IRS Steps Up Enforcement in Crypto Sector

IRS Criminal Investigation (CI) Chief Agent Yury Kruty commented on the case, stating, “We are committed to uncovering complex financial schemes involving cryptocurrencies and NFTs that are used to hide taxable income.” He emphasized that ensuring all citizens pay their fair share of taxes is critical in today’s economy.

The investigation was conducted jointly by the IRS and its Criminal Investigation Division, reflecting a growing focus on crypto-related tax compliance.

U.S. Expands Crypto Tax Regulations

The case also comes amid the IRS’s recent efforts to strengthen crypto tax regulations. In June 2024, the IRS introduced new rules requiring third-party platforms—such as centralized exchanges (CEXs)—to report users’ digital asset transactions.

Since January 2024, crypto brokers have been obligated to disclose all sales and exchanges of digital assets. However, a legislative shift occurred on April 10, when former President Donald Trump signed a resolution overturning a Biden-era regulation that would have extended tax reporting to decentralized finance (DeFi) protocols.

The repealed “IRS DeFi Broker Rule”, which was set to take effect in 2027, would have forced DeFi platforms to disclose both gross proceeds and user identities involved in crypto transactions.

Legal Experts Call for Balanced Regulation

Despite the IRS’s push, some crypto legal advisors argue that U.S. policymakers should prioritize stablecoin frameworks and crypto banking regulations over expanded tax rules. Mattan Erder, general counsel for decentralized blockchain network Orbs, told Cointelegraph that resolving securities law ambiguities and easing banking restrictions would have a greater positive impact on the industry.

“For the crypto sector to thrive, lawmakers need to focus on breaking down the barriers in crypto banking and regulatory clarity,” Erder said. “That’s where the real growth potential lies.”

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