Nfts
NFTs Vulnerable to Fraud and Scams, Says US Treasury – Calls for Stricter Regulations
May 30, 2024 02:08 a.m. | 2 minutes of reading
The US Treasury Department has sounded the alarm regarding non-fungible tokens, believing that blockchain-based assets are highly susceptible to being used for fraud and scams.
What happened: In a new risk assessment of illicit NFT financing report Published on Wednesday, the Treasury noted that flaws in the asset class could be exploited by bad actors to launder money from crimes, thereby concealing illegal origins.
That said, the report found far less evidence of NFT misuse for terrorism and proliferation financing purposes.
Treasury has detected several issues in the niche cryptocurrency vertical, such as inadequate cybersecurity protections, challenges with copyright and trademark protection, and fluctuating prices of NFTs.
Additionally, some NFT platforms were found to lack “appropriate” controls to combat money laundering and terrorist financing.
To address these risks, Treasury has advocated for stricter enforcement of current laws in the sector, the implementation of additional regulations and a better understanding by the industry of the associated dangers.
Why is this important: Without clear laws governing the sector, NFTs remain on the radar of US regulators.
Earlier in the year, GameStop Corp. close its NFT marketplace citing regulatory uncertainty.
The SEC charged a Los Angeles-based media and entertainment company, Impact Theory, LLC Last year, for conducting an unauthorized offering of securities of cryptocurrency assets via NFTs.
Even a star footballer Cristiano Ronaldo was the subject of a billion-dollar class action lawsuit for promoted investments in its NFTs on Binance (CRYTO: BNB)
Over the past 24 hours, NFTs saw nearly $17 million in sales volume in over 240,000 transactions, according to at CryptoSlam. Bitcoin (CRYPTO: BTC) was the largest NFT chain, with over $5 million in volume, followed by Ethereum (CRYPTO: ETH) And Solana (CRYPTO: GROUND)
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