NFT Trader’s Tax Fraud: From CryptoPunks to the Big House!

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So, picture this: a 45-year-old NFT trader named Waylon Wilcox, who apparently thought he could outsmart the IRS with the same finesse he used to trade CryptoPunks. Spoiler alert: he couldn’t. Waylon is now facing up to six years in prison for underreporting nearly $13 million in profits. Yes, you read that right—$13 million! That’s enough to buy a small island or at least a decent-sized yacht. 🛥️

Waylon, in a moment of sheer brilliance, decided to file false income tax returns for 2021 and 2022. I mean, who needs honesty when you can just play a game of “let’s see how much I can hide from Uncle Sam”? On April 9, he pleaded guilty to two counts of filing false individual income tax returns. The US Attorney’s Office for the Middle District of Pennsylvania must have been thrilled to catch this digital Picasso of tax evasion.

In April 2022, our hero filed a tax return that underreported his income by about $8.5 million. That’s like saying you only ate one slice of cake when you actually devoured the whole thing. 🍰 And just when you thought he’d learned his lesson, in October 2023, he did it again! This time, he underreported by an estimated $4.6 million. It’s almost as if he was trying to set a record for the most creative tax evasion. 🎨

According to the feds, the maximum penalty for these offenses is six years in prison, a supervised release, and a fine. But let’s be real—what’s a little prison time when you’ve got a portfolio of CryptoPunks? Waylon bought and sold 97 pieces from the largest NFT collection, which has a market cap of $687 million. Talk about a high-stakes game of Monopoly! 🏦

In 2021, he 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 for $4.9 million. The Department of Justice must have been shaking their heads when they saw he selected “no” when asked if he had engaged in digital asset transactions. Classic move, Waylon. 🙄

Yury Kruty, the Special Agent in charge of the IRS Criminal Investigation, said they’re committed to unraveling these complex financial schemes. Because, you know, nothing says “I’m a responsible adult” like trying to hide millions in profits from the taxman. “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,” he added. Well, Yury, I think we can all agree that Waylon just threw that confidence out the window. 🪟

The IRS and the Criminal Investigation Department are on the case, and they’re not playing around. Meanwhile, crypto tax laws are gaining traction, and the IRS is making sure that everyone knows they’re watching. In June 2024, new regulations made US crypto transactions subject to third-party tax reporting for the first time. So, if you thought you could hide your digital assets, think again!

In April 2023, President Trump signed a resolution to overturn a Biden-era legislation that would have required decentralized finance protocols to report transactions to the IRS. Because who needs more regulations when you can just let people do whatever they want with their money, right? 🙃

As we look ahead to 2027, the IRS DeFi broker rule is set to take effect, expanding reporting requirements to include DeFi platforms. But some crypto regulatory advisers believe that stablecoin and crypto banking legislation should take precedence. Because, of course, we need to prioritize the things that really matter—like making sure our digital coins are safe and sound.

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2025-04-13 15:22