In the last couple of months, the NFTs have continued to grow in popularity but as concerns about the industry’s involvement in money laundering and tax evasion emerge, more things might be happening behind your backs than you think. Mr. Whale is a crypto investor and uber-bearish crypto commentator. He recently drew people’s attention to the dark side of the growing NFT space. Earlier this week, it was mentioned in a blog post by the Bitcoin early adopter that the popularity and importance of NFT in the marketplace at present is all because of their ability to promote money laundering and tax evasion from the rich. He said:
“Behind the facade of a bunch of bored rich dudes buying digital artwork at insanely high prices lays a sinister and twisted money laundering scheme for crypto’s ultra-rich elites to make their illegal profits look legal.”
Further Mr. Whale pointed out that NFTs are subjective and the beauty of art lies in the eye of the beholder. This is the reason why it is so easy to move money through NFTs. And often they do not face any examination from any legal authorities. Mr. Whale said that the real aspect of money laundering is very simple. Purchasing NFTs with illegal funds by yourself is a simple way to transfer those funds, claiming that these funds are used to legally purchase artworks while avoiding taxes in the whole process. Earlier this year, former USA Today reporter Isaiah McCall demonstrated this on his blog, where he explained the process saying:
“If you have $1 million in illegal money, you would spend $1 million on your own NFT. You can do this yourself or use a trusted third-party account. Then you resell the trash for nothing and bank the profits.”
Mr. Whale On Regulating These NFTs
Cat Graffam is an associate faculty member in the Art & Design department at Lasell University, Massachusetts. She also had his opinions on this matter. She told Whale that NFT has been used to launder money like physical art. NFT have a lot of advantages to offer to people. She explains:
“It could possibly be even easier to move dirty funds around because it is tied to a decentralized currency and the fact that there are no physical artworks to transport or store in off-shore tax haven warehouses.”
According to both of them, all these reasons tend to attract the attention of regulators and tax authorities. Furthermore, Whale said that he does not doubt that the government will eventually stop this trend. He adds, “While there are a number of NFT exchanges without KYC/AML regulations, this will definitely change in the future.”
However, given the subjective nature of NFTs, it will be difficult to determine which works of art are really worth the money and which are not. While CryptoPunks NFTs seem senseless to some people, the people who actually buy these NFTs do not really appreciate the artworks they are paying for, so it is difficult to quantify the value of these works.
Stay updated on all the latest news related to crypto mining, DeFi and NFTs with our website.