On April 13, 2025, a CryptoPunk trader, Waylon Wilcox, made headlines after pleading guilty to underreporting nearly $13 million in profits to the IRS, facing a potential six-year prison sentence. This high-profile case from the U.S. Attorney’s Office for the Middle District of Pennsylvania highlights the growing scrutiny of NFT trading and its tax implications, sending a warning to crypto investors about the importance of compliance in the rapidly evolving cryptocurrency market. Here’s a closer look at the case, its broader impact, and what it means for the future of NFTs.
The Rise and Fall of a CryptoPunk Whale
Waylon Wilcox, a 45-year-old from Dillsburg, Pennsylvania, emerged as a prominent figure during the NFT boom of 2021-2022. He sold 97 CryptoPunk NFTs over two years—62 in 2021 for $7.4 million and 35 in 2022 for $4.9 million—amassing a staggering $13 million in profits. CryptoPunks, one of the most iconic NFT collections, saw immense popularity during this period, with top sales reaching millions. However, Wilcox failed to report these earnings on his taxes, evading approximately $3.3 million in tax payments. His guilty plea to tax fraud now exposes him to a maximum penalty of six years in prison, though his sentence may be reduced due to the plea, as well as supervised release and fines.
The case underscores the risks of non-compliance in the crypto market. As posts on X indicate, sentiment among crypto enthusiasts is mixed—some see Wilcox’s actions as a cautionary tale, with one user noting, “Blockchain’s transparent, but your tax forms better be too,” while others question whether this could set a precedent for stricter NFT trader regulations.
The State of CryptoPunks and the NFT Market in 2025
The CryptoPunk market has seen significant shifts since its peak. While Wilcox profited massively during the 2021-2022 boom, recent data shows the NFT market struggling. A CryptoPunk sale earlier this month resulted in a $10 million loss for its owner, who sold CryptoPunk #3100 for 4,000 ETH (about $6 million)—a sharp decline from its $16 million purchase price in March 2024. The floor price of CryptoPunks has only marginally increased in dollar terms, from $66,900 six months ago to $68,800 today, despite a rise in ETH terms, largely due to Ether’s declining value.
This case arrives at a time when NFT trading volumes have plummeted. Popular collections like CryptoPunks and Bored Ape Yacht Club have seen steady declines since 2022, with recent weeks marking some of the lowest trading activity. The Wilcox case may further dampen enthusiasm, as investors grapple with both market volatility and heightened regulatory oversight.
Regulatory Implications for NFT Traders
Wilcox’s guilty plea could have far-reaching consequences for the NFT and cryptocurrency space. The IRS and other regulatory bodies are increasingly focusing on digital assets, especially as NFTs gain mainstream attention. The transparency of blockchain technology makes it easier for authorities to track transactions, leaving little room for tax evasion. This case may set a precedent, as some X users speculate, potentially leading to stricter reporting requirements for NFT traders. The U.S. government’s crackdown on tax fraud in the crypto space isn’t new—earlier this year, a Bybit payroll manager was sentenced to nearly 10 years for defrauding $5.7 million, and a Canadian crypto founder received 3.5 years for hiding 450 Bitcoin.
What’s Next for Crypto Investors?
The Wilcox case serves as a stark reminder for crypto investors to prioritize tax compliance. As the cryptocurrency market matures, regulators are closing loopholes, and the days of treating NFT profits as “untaxable” are over. Investors should consult tax professionals and maintain detailed records of their transactions to avoid similar fates. Meanwhile, the NFT market faces an uphill battle to regain its former glory, with declining prices and trading volumes signaling a shift in trader sentiment.
