NFTs
US Treasury says NFTs are “highly susceptible” to fraud, but ignored by high-profile criminals • The Register
The US Treasury Department assessed the risk of non-fungible tokens (NFTs) being used for illicit finance and deemed them unsuitable due to a lack of adequate locks that would prevent illegal applications.
On a report published on Wednesday, the Treasury Department concluded that NFTs “are highly susceptible to use in fraud and scams” and that inadequate cybersecurity and protections on NFT platforms make it easier for cybercriminals to steal the once popular digital assets. Horse, find the stable door.
In addition to their non-zero use as vehicles for fraud and scams like rug pulls (when an NFT project ends suddenly and the scammer disappears with the invested funds), chargeback fraud and market manipulation, the Treasury Department said that NFTs have been frequently observed being used by cybercriminals for money laundering.
Money laundering, he said, is facilitated by the fact that many NFT platforms do not have any type of customer identification requirements, making it easier to use the platforms for illicit transactions.
But what about those terrorists carrying NFTs?
It is often assumed that, along with petty criminals who use Dicash to hide their tracks, the cryptocurrency/decentralized finance/NFT realm is teeming with terrorists, drug kingpins, and other underworld heavyweights. Not so, the Treasury discovered – this is mainly a common Internet fraudster.
“Thieves, scammers, and other bad actors have used a variety of techniques to transfer and launder illicit proceeds using NFTs and NFT platforms,” the report noted — more organized criminal operators and terrorists, however, are ignoring the modern Beanie Baby.
“NFTs and NFT platforms are rarely, if ever, used for drug trafficking, proliferation financing, or terrorist financing,” the agency said in its report. “While there is potential for terrorist groups to use NFTs to raise or move funds, the few examples of this occurring in practice indicate that efforts to raise funds using NFTs have not been successful.”
Government stock exchange accountants noted that some criminals have begun adopting virtual assets to move money and noted that they could enter the NFT space, but that there is “limited information about the misuse of NFTs for…illicit activities.”
Fraud perpetuated by market fluctuations, exaggerations and insufficient copyright protections, yes – terrorism, probably not.
“Given how recent and ongoing the evolution of the NFT market is, there were relatively few examples of cases that this assessment could include,” the Treasury Department said in its report. “This, however, does not necessarily reflect the level of risk.”
So the reality is not as bad as it could be, but the illicit use of NFTs could increase. Why, given the fact that even the most popular brands are almost useless Compared to previous highs, anyone would try to invest in the market, even illegally, is anyone’s guess – but they could.
However, the Treasury Department wants steps to be taken to prevent such an event from occurring and has made several recommendations on how the government and the DeFi community can do so.
First, Treasury wants authorities to make government agencies aware of their regulatory obligations regarding NFTs and wants new regulations for NFTs to be considered. It also recommends that the government work with the private sector to improve its understanding of the NFT market and to encourage companies to take steps to prevent fraud and fraud. Existing mitigation measures, the Treasury Department said, have been insufficient.
Despite all these shortcomings and recommendations, the Treasury Department wants to make it clear that preventing terrorists from using NFTs should not yet be a high priority.
“Compared to other sectors… that pose greater money laundering and terrorist financing risks, addressing any gaps applicable to NFTs should not be prioritized over existing regulatory priorities,” Treasury said.
In other words, NFTs are no longer anyone’s priority – not even cybercriminals looking for a new way of money laundering – just the same old scammers looking to scam gullible internet citizens. ®