How do you get a $50k tax bill implies realized gain of 330k? OP states $120k gain on top of 47k salary. To be generous, i'll first assume that he has had his salary withheld at the correct rates. Federally he will owe 32253 in additional tax (short term so treated as income, and marginally falls into a mix of 25 and 28% brackets). Must be that he also is in a high tax state. I understand California the best (which also might be the highest tax state). There, the gain would also be treated as regular income, and taxpayer would owe an additional 10458. So, 42700 in taxes. Running the numbers backward to find out income from tax liability is a little trickier, but it comes out to nowhere near 33000.
So perhaps the tax bill was not quite 50k, but it's certainly the right ballpark from what I can see. Very possible that he also under-withheld during the year, or had a higher gain, or his tax bill was a little lower, or had other issues that we don't know about. In any case, not what I'd call "makes NO sense at all" or indicative of a current fundamental misunderstanding of the tax system (saying nothing about his misunderstanding prior to the events).
Now, the bigger question I have is did this happen on a foreign exchange? Binance, bitfinex, etc? And if it did, has OP let the treasury know about his foreign accounts? FBAR is a real thing with huge penalties for non reporting and lying.
https://www.irs.gov/businesses/small-businesses-self-employe...