Singer Made $3M Selling NFTs—Then Lost It All in a Crypto Crash and Taxes
A private financier’s worst nightmare was turned into artist Jonathan Mann’s new ballad—a dramatic recount of the unwary tax traps and the risks of crypto volatility.
A Dream Come True—Until the Market Crashed
On Jan. 1, 2022, Mann was the talk of the town selling 3,700 of his tracks as NFTs for $800 each, earning nearly $3 million in Ether (ETH). Mann and his wife were so rolled up in crypto fortunes that they chose not to cash out their ETH in hopes it would skyrocket.
That hope soon evaporated. Shortly thereafter, the ETH market began plummeting. The rout went deeper as the Terra ecosystem imploded, taking much of the DeFi universe down with it.
The Tax Trap: $1.1 Million to the IRS
The hardest hit wasn’t in the market—it came from the IRS. As Mann outlined in a new song, his NFT profits were deductible the moment they made it into his pocket, based on the then-current ETH price.
That meant even as his $3 million in ETH depreciated, his tax bill remained tied to the original amount—roughly $1.1 million.
Loan Liquidation and Desperate Seeking of Answers
Rather than letting their crypto go for a loss, the couple had lent cash against it via Aave, risking their ETH as collateral. But the relentless decline triggered a liquidation event, wiping out 300 ETH.
“Years of creative work were lost,” Mann warbled. Then he and his accountant double-checked his books to confirm the exact IRS tab: $1,095,171.79.
A Rare NFT Saves the Day
With liens and asset seizures threatened, Mann sold his most precious Autoglyph NFT—a one of the very first generative works from Larva Labs. After failed attempts on social media, a broker brought him to a buyer who was willing to pay $1.1 million.
Because his previous losses erased potential capital gains, he owed no further taxes on the sale. The sale enabled him to cover his IRS debts.
Still Singing, Still Selling
Despite the experience, hope has not been lost on Mann. He continues to write and sell a fresh song every day as an NFT and maintains his aspiration of one day hitting another $3 million jackpot—hopefully, though, with a tax plan in place.
