Transactions with NFTs, increasingly used for money laundering

Defined as Non Fungible Token, NFTs are presented as a method by which artists can sell their digital creations as true works of art, the value of an NFT being given by the highest price the future owner agrees to pay.

Unlike the traditional art market, where each artifact (eg painting, statue) has a value that can be easily demonstrated by the age, notoriety and reputation of the artist, then confirmed by institutions and experts with an undisputed reputation, in the case of the emerging market. Practically anyone can pass on NFTs as an expert or connoisseur, the value being easily confused with the investment opportunity that could bring even more profit, at a future resale.

Inevitably, the unregulated market for NFTs attracts all sorts of players, some of whom are less interested in the value of digital assets as works of art and more in the possibility of using NFTs as a money laundering tool, bringing in the real economy, not very small sums of money, obtained through illicit means such as thefts, scams, drug trafficking, etc.

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In the absence of a unanimously recognized legal authority that can confirm the true value of digital assets called Non Fungible Tokens (NFT), who can objectively say what the right price is?

Taking advantage of the legislative vacuum, an increasing number of alleged investors end up being both sellers and buyers of the respective NFT, often the traded amount returning to a cryptocurrency account belonging to the same owner.

According to the analysis published by Chainalysis, there are already thousands of cases of suspicious transactions with NFTs, bought from self-financed addresses, meaning that the cryptocurrency address of the seller and buyer coincide, or can be connected to electronic wallets owned by the same owner.

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The most prolific NFT seller / buyer found by Chainalysis made 830 such transactions. At the same time, another 262 users were identified as making self-financed sales more than 25 times; The total profit of this group was about $ 8.9 million.

By artificially inflating trading volume, money laundering practices have brought the market share of the LooksRare marketplace above that of rival NFT market, OpenSea. But a separate analysis published by CryptoSlam shows that up to $ 8 billion in traded volume could result from suspicious transactions using Ethereum cryptocurrency.

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