Nfts
NFTs are “highly susceptible” to fraud and scams
THE Treasury Department has a warning for NFT fans: use them at your own risk.
The Department published a review On Wednesday (May 29), it was found that non-fungible tokens (NFTs) – while rarely involved in activities such as terrorist financing – are nonetheless “highly susceptible” to being stolen and used for fraud and dissemination. scams.
“Additionally, criminals use NFTs to launder the proceeds of underlying crimes, often in combination with other techniques or transactions intended to conceal the illicit source of funds,” the assessment said.
“Criminals can exploit vulnerabilities related to the characteristics of NFTs, the assets or rights they reference, and regulatory frameworks in the United States and abroad.
The Treasury found that cybersecurity vulnerabilities, copyright and trademark protection challenges, and the hype and fluctuating prices of NFTs – blockchain-based digital assets – can enable criminals to commit fraud and theft related to NFTs and their platforms.
The problem is aggravated by a lack of internal controls with businesses and NFT platforms to prevent risks to market integrity, sanctions evasion, terrorist financing and money laundering.
NFTs have emerged from the 2021 cryptocurrency bull market, with advocates touting them as a way for everyday customers to participate in the digital currency market. Since then, their popularity has declined, with sales of NFTs down 63% in 2023.
Earlier this year, GameStop, which unveiled an NFT walk in the summer of 2022, has decided to leave the non-fungible token activityciting ongoing regulatory uncertainty around cryptocurrency.
Meanwhile, the broader crypto market has recovered, leading to a proliferation of crypto-related crimes.
A March FBI report found that Americans filed more than 43,000 complaints about cryptocurrency scams last year, with losses of crypto-based frauds and scams jumped to $3.9 billion, a 53% year-over-year increase.
“These scams are designed to lure targeted individuals by promising lucrative returns on their investments,” the FBI noted.
This increase is due to the rise of “scam factories,” operations in which tens of thousands of people are illegally trafficked. locked up and forced to scam foreign nationals without their knowledge.
Among the most popular tactics is “pig butchery,” where scammers use fictitious identities to develop relationships with victims through dating apps, social media platforms, professional networking sites or encrypted messaging apps.
The schemes are designed to build trust, usually starting with a romance or trust scam and progressing to a cryptocurrency investment fraud – where the “pig”, after being fattened, is “slaughtered”.
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