Nfts
US Treasury highlights risks of NFTs for illicit financing
Non-fungible tokens (NFTs) have undergone their first risk assessment by the US Treasury Department, which highlights several potential risks associated with security investing in the sector.
Following the March 2022 publication of Executive Order 14067 on digital assets, this report is part of ongoing work to advance responsible development and combat illicit financing threats.
THE Treasury breaks down various threats to the NFT sector in its assessment, noting the possibilities of scams, fraud, and theft. These include unique digital assets that are immutable tokens registered on blockchains and whose use across multiple industries extends to their use as proof of ownership of tangible goods, virtual goods and even rights voting. NFTs remain vulnerable to various crimes due to the freedom offered by decentralized applications.
Some of the methods used for money laundering with NFTs include self-laundering, in which criminals buy and sell the NFTs to establish some sort of legitimate transaction, and layering, in which criminals make multiple sales in a short time and on different platforms. to conceal the source of the illicit money.
The report states that through scams, more than $100 million worth of NFTs were stolen during the period from July 2021 to July 2022.
Among the most high-profile figures are Nathaniel Chastain, former product manager at OpenSea, sentenced to 30 months in prison in August 2023 for insider trading, and Aurélien Michel, indicted in January 2023 for a 2.9 million dollar carpet theft millions of dollars. scam involving “Mutant Ape Planet” NFTs.
Treasury recognizes that while most illicit financing remains in fiat currency, greater attention is needed to the NFT market to avoid its anonymity and ease of use for criminal purposes.
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