Musician's $3M NFT Fortune Vanishes Amid Crypto Crash and Tax Burden
Jun 8
2 min read
Musician Jonathan Mann, known for his "Song A Day" project, faced a significant financial setback after his $3 million NFT fortune evaporated due to a crypto market crash and substantial tax obligations. His experience highlights the volatile nature of the crypto market and the complexities of digital asset taxation, prompting him to explore alternative investments.
A Fortunate Start Turns Sour
In January 2022, Jonathan Mann sold his entire back catalog of 3,700 songs as NFTs, generating approximately $3 million in Ethereum (ETH). Despite this initial success, Mann and his wife decided to hold onto the ETH, anticipating further price increases. However, the market took an unexpected turn:
The price of ETH began to decline shortly after his sales.
The Terra ecosystem collapse in May 2022 triggered a broader crypto market crash.
The Crypto Tax Nightmare
Mann's financial woes were compounded by a substantial tax bill from the US Internal Revenue Service (IRS). The IRS taxed his NFT earnings as income, based on the value of ETH at the time he received it, not its depreciated value. This meant that even as his $3 million in ETH plummeted in value, his tax liability remained fixed at nearly $1.1 million.
To avoid selling his ETH at a loss, Mann took out a loan from the lending protocol Aave, using his ETH as collateral. However, the market crash led to liquidations, causing his collateral to vanish and leaving him with a significant debt.
A Rare Autoglyph to the Rescue
Facing the threat of asset seizure, Mann turned to a last resort: selling a rare Autoglyph NFT he had purchased years prior for a mere $36. After some difficulty, he found a broker who offered $1.1 million for the NFT, just enough to cover his tax obligations. This sale, while bittersweet, allowed him to settle his debt with the IRS.
Lessons Learned and Future Endeavors
Mann's ordeal serves as a cautionary tale for other crypto investors and creators. His experience underscores the importance of:
Understanding and planning for crypto tax liabilities.
Considering immediate conversion of crypto earnings to stable assets to mitigate volatility risks.
Despite the significant loss, Mann continues to create and sell songs as NFTs, hoping to recoup his fortune. His story has also prompted him to explore more stable and utility-driven altcoins for future investments, moving away from the speculative nature of some earlier crypto ventures.
Sources
$3 Million NFT Fortune Vanishes To Crypto Tax and Market Crash, Here's How, Coinspeaker.
Musician’s $3M NFT Loss Sparks Move to 2025’s Best Altcoins, Bitcoinist.com.
NFT artist relives ‘crypto tax nightmare’ in new song, Cointelegraph.
Song A Day creator recounts 'tax nightmare' after making millions from NFT sale, CryptoSlate.