There are various reasons why NFTs are questionable. ❓

Their connections to money laundering are merely another issue, but it's no different from regular art, is it not?👀

NFTs frequently grab headlines on CT✅

One day, someone is making millions by offering "digital art" as an NFT.

Then another day, a would-be NFT startup pulled a rug from under its investors and stole all of its money.

Money laundering is a thing in the NFT space🖇

It is challenging to imagine a scenario in which NFTs are not utilized in money laundering.

NFTs give a useful layer of abstraction for criminals;👇

→ are really easy to use

→ practically free at the point of service

→ come with a ton of privacy measures on top of that.

The value transferred from unauthorized addresses to NFT markets skyrocketed, topping $1M in crypto, in the 3rd quarter of 2021, the table shows.

The figure grew to nearly $1.4M in the 4th quarter

In both quarters most addresses were associated with fraud in the NFT space.📈

♻️How are NFTs used for Money laundering

NFTs carry a number of money laundering vulnerabilities that might put people & projects at risk:👇

1- Wash trading

2- Hiding identities

3- Assets & Money can't be seized

4- Hacking

🔹 Wash Trading

In NFT space, Wash trading is when the seller is partaking on both sides of the transaction to present a false impression of the value & liquidity of an item.

It is easy to wash trade with NFTs cause many NFT platforms allow users to do so confidentially.

🔹 Hiding Identities

When money is being laundered, criminals can remain anonymous by using a cryptocurrency wallet that doesn't require verification.

✔️They have the ability to transfer significant sums of money secretly from one wallet to another.

🔹Assets & Money can't be seized

In the NFT world, they may act instantaneously and can be transferred from one digital wallet to another.

🖇making it challenging for law enforcement to seize illicit assets and money.

🔹Hacking

Along with phishing and malware attacks, identity fraud, and forgeries, we also observe money laundering scenarios involving NFT

→ There are a few more moving parts to the process, & above mentioned rough outlines how NFT money laundering works.

Is it legal❓

Entirely🎯

Regular financial laws still apply even when we're talking about bitcoin assets.

It is forbidden to use wash trade to fraudulently boost the price of a product, as well as to launder the proceeds of crime using any manner.

♻️How the risks can be reduced

Ways to reduce money laundering with NFT:👇

→laying the groundwork for businesses that specialize in NFTs.

→customer two-factor authentication option execution.

→adeptly putting cybersecurity safeguards into practice

→Use of KYC application

Conclusion ✍️

The NFT Space has undergone factual growth.

Last year, the NFT market reached a global value of $42B. which, unsurprisingly, raises the NFT Marketplaces' risks

But we likely to see increasing regulation as governments worldwide try to tackle their use in ML.