NFT

Is NFT used for money laundering?

to answer the following Question: is NFT used for money laundering? As the world of cryptocurrencies rose, virtual trading and transactions became more tangible daily.

It is ironic because none of the virtual assets are tangible, especially in the crypto world.

With the evolutions on the internet and the world of digital codes, something new emerged called the NFT; further into the article, we will be explaining what an NFT is.

However, the NFT art pieces became the new art form of the internet, and then even was created a new platform called the OpenSea where you could trade or Buy/Sell NFTs.

Over time there has been a lot of NTFS on the market, some of which are sold for a very hefty price, even up to millions of dollars.

The platform which supports the NFTs (OpenSea) uses the ETH network to operate the transactions even the NFTs that have been listed on this platform are sold with ETHEREUM.

Overall, the NFT market will be a permanent part of the internet, and who knows, maybe someday the NFTs will become the new form of artistry.

However, today we will be talking about a serious issue regarding these graphical assets, and this subjacent creates concern and a question:

Is NFT used for money laundering?

Over time there have been rumors about NFTs used to perform fraud and laundering.

In this article, we will tend to this problem to see whether it is true, so keep reading with us, and hopefully, you will have your answer by the end of this article.

 

The rise of NFT

As we mentioned in the last section of the article, NFTs are an innovative form of crypto assets.

Crypto assets are code pieces on the BlockChain network that are worth a lot of money, and NFTs, just like the cryptocurrencies, are stored in the wallets on the BlockChain or the wallet company servers.

Here are some of the famous NFTs on the market:

  • The SMB (price: $2.1 Million)
  • Bored Ape (cost: $3.14 Million)
  • Doge ($4 Million)
  • The Replicator ($4.1 Million)
  • CryptoPunk ($4.31 Million)

In the history of NFTs, this is a list of the most expensive and famous NFTs on the network.

Even some celebrities and famous people had their NFT made and paid millions and millions of dollars for their NFT designs.

We said there are big purchases in the OpenSea community; for example, in 2021, an artist named Winkelmann sold a piece of NFT art for over 65 million dollars.

This fact made Winkelmann one of the most valued artists alive.

To understand the NFT world, we should first explain what an NFT is?

What is an NFT?

NFT or none fungible tokens are the new form of art.

So many artists make digital art pieces and see them on the OpenSea network, but what makes these art forms so valuable.

We will tell you.

When an artist creates an NFT and sells it on the OpenSea to an anonymous individual, they are selling the ownership of the art piece; in other words, there is only one copy of that image, gif, or whatever, and the person that buys it owns it.

NFTs usually have different formats and realities; they can be:

  • Videos
  • GIFs
  • Images
  • PNG
  • SVG
  • JPG
  • HEIC

 

Nft and atherium vector

These are some of the standard formats of the NFT arts.

Until January 2022, the trade volume of the NFT arts reached over 5 billion dollars on the OpenSea network; this is immaculate.

Now let’s move on and get to the main subjects of our article, shall we?

 

Fine art: a long history of Money laundering

The story and connection between the acceptable art trade and money laundering are pretty exquisite, to be honest.

The cleverness behind the art schemes has its root in the early 1700s.

Even in some eras, individuals would write up bank information on the art pieces and then sell them when they were selling that information.

Several decades and even centuries ago, the artist created masterpieces that we will see today in museums and specific exhibits, for instance, the Mona Lisa by Leonardo Da Vinci, which was painted in the 1503 and this painting was stored in the Louver Museum in Paris since 1797, the price on this artwork is almost 850 million dollars!!!

In conclusion, a nearly 1 in 1-meter painting can almost transfer millions and, in some cases, like the Mona Lisa, billions around and even out of the border.

This matter concerned the FinCEN organization (the United States Treasury Department’s Financial Crimes Enforcement Network) highly therefor, the government became increasingly sensitive to fine art transportation.

And after the Mona Lisa’s fiasco in Paris, this theory gets more muscular, suggesting that the Mona Lisa was stolen and smuggled out of the country. The vandalized painting was a replica.

This hypothesis suggests that there is a possibility that nearly 850 million dollars were stolen.

We think that by now, you know how a miniature painting can be a perfect way for criminals to perform money laundering.

Many individuals can use this method to transfer vast amounts of money worldwide.

euro-money-sponge-concept-money-laundering
100 Euro money banknote, gloves, and sponge. The concept of money laundering ALM.

Now let’s get to the next section and see what the risks of NFT in the role of a tool for money laundering are?

 

What are the risks of NFT trading and money laundering?

That last section of the article explained how a piece of fine art is the perfect tool to perform money laundering.

Now imagine that the NFT arts are the new art form, and there is no rule against the price of the NTFS on the OpenSea network.

It can be $1 to 1 billion; in this case, no one can bother because the NFT world is also encrypted.

Therefore using an NTF to transfer vast amounts of money to any location in the world seems like a dream come true for people that are into money laundering.

Networks like BlockChain and OpenSea manage their transaction. In other words, any suspicious activity will be monitored. However, there is a slight chance that something can slip from the network security; we mean that it is possible.

Now to the last subject of the article, which explains why is the NFT market so attractive to money laundering?

Why NFTs are attractive for money laundering

As we mentioned in the last section of the article about the risks of NFT, this section will explain more about that category.

NFT market is one of the most suitable places for frauds to act on their mischief; however, in some cases, the security of the OpenSea and the BlockChain networks stops them from doing so.

However, sometimes incidents happen, and these people we are talking about get attracted to this world just for black money laundering.

Several reasons can cause the attraction of the money laundering to the NFT world:

  • The encryption of the NFT world makes it possible to perform vast transactions on the NFT market without anyone ever knowing about it.
  • The “No Limit” policy of the OpenSea network makes it possible to transfer as much money as you desire without ever being limited.
  • The classic part of the money laundering part of the art selling attracts more attention because NFT is a new form of artistry, and they can use that to do their job perfectly.
  • The last factor is that the NFT arts usually sell for vast amounts by themselves. This makes the NFTs one of the best covers to perform legitimate transactions without trouble.

These are the critical factors in the attraction of the NFT and the black money laundering; now, let’s conclude this article and discuss the subjects in summary, and see if there is a solution for this risk?

As a final observation

We discussed the world of crypto assets and NFTs inside this encrypted environment.

We figured out that the security of the anonymous transaction on the NFT and crypto market will be the downfall of these industries.

Let us tell you why.

We mentioned that the NFT networks allow the vast transactions to happen anywhere and anytime; for example, you can buy an NFT art for $1 and then sell it for $1 million the other day.

It is correct that using NFTs in the money laundering process is very much possible, but it is only a matter of time before governments step into the game and stop all of the NFT activities.

Or the companies and networks like BlockChain and OpenSea take the matter into their own hands and gather all of the NFTs or change their policy.

We appreciate you accompanying us until the last words of the “Are NFT used for money laundering?” article.

We would love to hear your insights on this article; you can use the contact page to contact us.

 

 

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