Waylon Wilcox, 45, of Dillsburg, Pennsylvania, appeared in federal court on April 9, 2025, before Senior United States District Judge Malachy E. Mannion, and pled guilty to a two-count criminal information charging him with filing false individual income tax returns.
According to court documents and statements made in court, on April 10, 2022, in Cumberland County, Wilcox filed a false individual income tax return for tax year 2021 that underreported his income for tax year 2021 by approximately $8,511,238 and reduced Wilcox’s tax then due and owing by approximately $2,180,452.
On October 10, 2023, in Cumberland County, Wilcox filed a false individual income tax return for tax year 2022 that underreported Wilcox’s income for tax year 2022 by approximately $4,599,532 and reduced Wilcox’s tax then due and owing by approximately $1,098,623.
Wilcox obtained most of this unreported income after acquiring and selling 97 pieces of digital artwork from the “CryptoPunks” collection of 10,000 unique art characters. Individual pieces from the digital artwork collection were referred to as “Punks.”
Each Punk was unique and contained digital proof of ownership that could be tracked on a blockchain, a digitally distributed, decentralized, public ledger. Two Punks from the same blockchain could look identical but were not interchangeable, meaning they were non-fungible.
These so-called “non-fungible tokens” (NFTs) could be traded and sold for money or cryptocurrency.
In 2021, Wilcox sold approximately 62 Punks for a total of approximately $7,402,935. In 2022, Wilcox sold approximately 35 Punks for a total of approximately $4,899,180.
On his 2021 individual income tax return, Wilcox falsely answered “no” to the question “At any time in 2021, did you receive, sell, exchange, or otherwise dispose of financial interest in any virtual currency?”
On his 2022 individual income tax return, Wilcox falsely answered “no” to the question “At any time during 2022, did you: (a) receive (as a reward, award or payment for property or services); or (b) sell, exchange, gift or otherwise dispose of a digital asset (or a financial interest in a digital asset)?”
When a taxpayer sells an NFT, including a Punk, then the taxpayer must report sales proceeds and any gains or losses from the sale of the NFT on their tax return.
“IRS Criminal Investigation is committed to unraveling complex financial schemes involving virtual currencies and non-fungible token (NFT) transactions designed to conceal taxable income,” said Philadelphia Field Office Special Agent in Charge Yury Kruty.
“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.”
