According to a report from the Blockchain data platform Chainalysis, they discovered a small but growing part of their activity in the NFT marketplace that could be attributed to money laundering.
“It is difficult to quantify money laundering in the physical arts, but thanks to the inherent transparency of the blockchain, we can make more reliable estimates of NFT-based money laundering.” Said the report late Wednesday.
The value sent to the NFT marketplace by illegal addresses increased significantly in the third quarter of 2021, surpassing $ 1 million worth of cryptocurrencies.
This number increased again in the fourth quarter, reaching a high of just under $ 1.4 million.
“In both quarters, most of this activity came from fraudulent addresses that fund the NFT marketplace to make purchases,” the report said.
In both quarters, a significant amount of stolen funds were sent to the market.
“Probably the most worrisome thing is that in the fourth quarter, an address at risk of sanctions sent about $ 284,000 worth of cryptocurrencies to the NFT marketplace,” the researchers said.
NFTs can store data on the blockchain, which can be associated with images, video, audio, physics objects, membership, and a myriad of other use cases under development.
The popularity of NFTs surged in 2021. Chainalysis tracks at least $ 44.2 billion worth of cryptocurrencies sent to ERC-721 and ERC-1155 contracts (two Ethereum smart contracts related to NFT marketplaces and collections), only 100,600 in 2020. Increased from $ 10,000.
Some NFT sellers are also killing in clothes trade.
“Stage clothes transaction” is another concern of NFTs, which means that sellers execute transactions on both sides of the transaction in order to draw a misleading picture of the value and liquidity of the asset. ”
Using blockchain analysis, researchers identified 262 users who sold NFTs to their own-funded addresses more than 25 times.
110 profitable wash traders made a total of about $ 8.9 million in profits from this activity, reducing the loss of 152 unprofitable wash traders by $ 416,984.
“What’s worse, that $ 8.9 million can come from selling to unprotected buyers who believe that the value of the NFT they’re buying is increasing and that it’s being sold from one collector to another. It’s highly prone, “Chainalysis said.
“NFTs offer potential abuse. It’s important when our industry considers all the ways this new asset class can change the way blockchains are linked to the physical world.” Said the report.
According to a report reported last November, over 4,000 rupees of illegal transactions via cryptocurrency exchanges have been unearthed by the Indian Executive Office (ED) over the past year.
The abuse of digital coins on the dark web raises serious concerns about terrorist acts, drug trafficking, money laundering and howara-based transactions by militant groups. This poses a serious threat to national security and is an Indian security agency.
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