York County Man Sentenced to 12 Months In Prison For Filing False Income Tax Returns That Omitted More Than $13 Million In Income From Digital Artwork Sales

HARRISBURG - The United States Attorney's Office for the Middle District of Pennsylvania announced that Waylon Wilcox, age 46, of Dillsburg, Pennsylvania, was sentenced to a term of 12 months and a fine of $300,400 by Senior United States District Judge Malachy E. Mannion, for filing false individual income tax returns. Previously, in 2025, Wilcox paid the IRS $3,305,238 in tax due and owing to the United States plus $981,583.30 in interest.

According to United States Attorney Brian D. Miller, 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" (or 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. 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.

"When a U.S. taxpayer deliberately falsifies a tax return, it undermines the integrity of our tax system and contributes to the tax gap that impacts every American," stated Yury Kruty, Special Agent in Charge, IRS Criminal Investigation, Philadelphia Field Office. "In this case, Wilcox made millions from the sale of NFTs but willfully evaded paying the taxes he owed. Working alongside our partners at the Joint Chiefs of Global Tax Enforcement, we are able to uncover complex schemes involving digital assets and hold offenders accountable. Let this case serve as a warning - whether income is earned through traditional employment or the sale of digital assets, all taxpayers are required to report their earnings and pay their fair share."

The J5 is an international coalition that includes the Australian Taxation Office, the Canada Revenue Agency, the Dutch Fiscal Intelligence and Investigation Service, His Majesty's Revenue and Customs from the United Kingdom, and IRS-CI from the United States. The investigation stemmed from a lead generated during the J5's 2022 Cyber Challenge, which focused on NFTs. The J5 Cyber Challenge is an annual exercise where member agencies collaborate with partners to identify and develop investigative leads, analyze complex financial and cryptocurrency-related threats, and enhance joint operational capabilities to combat transnational financial crimes.

Assistant United States Attorney Joseph J. Terz prosecuted the case.

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