NFTs
US Treasury Highlights Risks of NFTs for Illicit Finance
Non-fungible tokens (NFTs) have received their first risk assessment by the US Treasury Department, which outlines several potential risks associated with investing in securities in the sector.
Following the March 2022 issuance of Executive Order 14067 on digital assets, this report is part of ongoing work to promote responsible development and address illicit financial threats.
O Treasury analyzes various threats attributed to the NFT sector in its assessment, noting the possibilities of scams, scams, and theft. These include unique digital assets that are immutable tokens registered on blockchains and whose use across multiple sectors extends to their use as proof of ownership of tangible goods, virtual goods and even voting rights. NFTs remain vulnerable to various crimes due to the freedom provided by decentralized applications.
Some of the methods used to launder money with NFTs include self-laundering, where criminals buy and sell the NFTs to themselves to establish some type of legal transaction, and layering, where criminals make multiple sales in a short space of time. of time and on different platforms. to hide the origin of illicit money.
The report indicates that through scams, more than $100 million worth of NFTs were stolen during the period from July 2021 to July 2022.
Some of the most high-profile individuals include Nathaniel Chastain, former product manager at OpenSea, who was sentenced to 30 months in prison in August 2023 for insider trading, and Aurelien Michel, who was indicted in January 2023 for a pull of $2.9 million carpet. scam involving ‘Mutant Ape Planet’ NFTs.
Treasury recognizes that while most illicit financing remains in fiat currency, more attention is needed to the NFT market to prevent its anonymity and ease of use for criminal purposes
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