NFT Crash Deepens: Whale Dumps Punk, $13M IRS Case Unfolds

• A whale sold CryptoPunk for $6M, incurring a $9.7M loss due to Ethereum’s price drop.
• NFT volumes fell over 50%, with CryptoPunks’ floor price falling over 60% from its peak.
• Another CryptoPunk holder pleaded guilty to $13M in tax evasion, facing up to 6 years in prison.

A high-profile crypto investor just offloaded one of the most valuable CryptoPunks ever—and did so at a massive loss. The transaction reflects the ongoing decline in the NFT market and Ethereum’s price. CryptoPunk was sold for 4,000 ETH, worth about $6.06 million. The seller originally purchased it for 4,500 ETH in 2023 when ETH traded at $3,509.

At the time of the sale, ETH had dropped 57%, bringing the true dollar loss to nearly $9.73 million. The buyer paid 4,000 ETH at the lower market rate, reducing the realized value sharply. The whale still received the largest NFT payment of the month. However, the loss underscored fading confidence in digital collectibles.

CryptoSlam data shows this was the highest-value NFT transaction in 30 days. Yet NFT volume across Ethereum and Polygon networks has declined over 50%. The broader downturn is part of a sharp correction since the 2021 NFT boom. Blue-chip collections like CryptoPunks have lost significant value.

At its peak, CryptoPunk floor prices reached 113.9 ETH in 2021. The current floor price is down more than 60%, sitting at around 43 ETH or $68,000. Market watchers note that sentiment remains weak despite periodic spikes. In January, rumors of a possible Yuga Labs IP sale briefly lifted CryptoPunks.

Related: OpenSea Seeks SEC Clarity on NFT Marketplace Regulations

In a separate case, another CryptoPunk whale is facing serious legal trouble. Waylon Wilcox, a 45-year-old from Pennsylvania, pleaded guilty to tax fraud. He failed to report $13 million earned from selling 97 CryptoPunks in 2021 and 2022.

According to the U.S. Attorney’s Office, Wilcox avoided paying over $3.3 million in taxes. The IRS stated this is one of the first major tax evasion cases involving NFTs. Wilcox could face up to six years in prison. His guilty plea may reduce sentencing time.

Investigators emphasized that the IRS is increasing scrutiny of digital asset transactions. IRS agent Yury Kruty said Americans must trust that the tax system applies equally. He stressed that virtual currency transactions are not exempt from reporting rules.

The legal case and massive loss highlight how far the NFT market has fallen. CryptoPunks remains the largest NFT project by market cap. But recent headlines show that the speculative era may be giving way to a more regulated phase.

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