The US Treasury Department Issues A Warning, Claiming That NFTs May Be Used For Money Laundering.

The United States Treasury Department is alerting investors that non-fungible tokens (NFTs) may be used to launder money.

According to a new study, the capacity to instantly transfer NFTs around the globe using the internet makes the embryonic crypto industry an ideal target for criminal activity.

According to the report, the spike in demand of the art market may create new dangers, depending on the structure and incentives of specific market activities in this sector (i.e., the purchase of non-fungible tokens).

Because the mobility of value can be achieved without incurring potential financial, governmental, or investigative costs of physical shipment, the process of transferring some NFTs via the internet without regard for geographic distance and across borders virtually instantly makes digital art vulnerable to exploitation by those seeking to launder illicit proceeds of crime.

According to the department, one common method to launder money using NFTs is for one organization to act as both the buyer and seller of an asset during a payment in order to create a record of sales for it on a blockchain.

According to the Treasury Department, the threat actors would then sell the asset to an unsuspecting buyer in order to receive clean funds.

The study wrote:

“NFTs can be used to conduct self-laundering, where criminals may purchase an NFT with illicit funds and proceed to transact with themselves to create records of sales on the blockchain. The NFT could then be sold to an unwitting individual who would compensate the criminal with clean funds not tied to a prior crime.”

The department also said that another danger associated with NFTs is that transactions provide a degree of anonymity.

Direct peer-to-peer transactions of NFT-secured digital art are also conceivable without the need of a middleman, and these transactions may or may not be published on a public ledger.

These digital art assets are innately easier to transfer between parties involved than traditional art because the parties do not need to actually move the art or pay for delivery companies such as insurance, transportation, or customs duties, though users may incur transaction fees.

Join CoinCu Telegram to keep track of news: https://t.me/coincunews

Follow CoinCu Youtube Channel | Follow CoinCu Facebook page

Patrick

Coincu News