The Pennsylvania man who pleaded guilty to falsely filing tax returns to conceal millions of dollars of income from CryptoPunks sales could be sentenced to up to six-years in prison.
Waylon Wicox, 45 admitted on 9 April in federal court that he under-reported income of more than $12 million from 97 CryptoPunks Transactions between 2021-2022.
Taxes on the unreported earnings were reduced by over $3.2 million. According to The U.S. Attorney’s Office of the Middle District of Pennsylvania.
CryptoPunks is a NFT of 10,000 algorithms generated characters. It was one of most desired collections when digital collectibles were a craze for 2021 and 2022.
Although they currently have a price floor of 42.49 ETH, (just over $69,000), in August of 2021 they would sell for a minimum of 125 ETH. (At the time worth almost $479,000.) CoinGecko.
The collection has fallen by 85.7% in dollar terms from its all-time peak. A CryptoPunks user sold NFT for just $6 million last week. This trade resulted in a $10-million loss.
Wilcox is said to have sold nearly $7.4M worth of Punks by 2021 and an additional 35 Punks at a cost of $4.9M.
Wilcox, however, allegedly did not check “yes” when asked to indicate whether or not he had sold any digital assets on his tax returns for both years.
The prosecution claims that the false statements allowed him to avoid paying $2,18 million of taxes in 2021 as well as $1.09 in 2022.
The IRS Criminal Investigation Department is dedicated to exposing complex financial schemes that involve virtual currencies or non-fungible token transactions to disguise taxable income, Yury Kruty, Philadelphia Field Office’s Special Agent in charge, stated in a recent statement.
It’s important that Americans feel that they can trust that their fellow citizens are following the law and paying all taxes due.
The Attorney's Office warned that when a taxpayer sells an NFT, they must report sales proceeds and any gains or losses from the sale of the NFT on their tax return.
According to federal law, Wilcox faces a maximum sentence of six years’ imprisonment, followed by a period of supervision and an fine.
Sebastian Sinclair edited the book
