UK flags money-laundering risks from NFTs

Non-fungible tokens (NFTs) can be used for money laundering or attract hackers’ attention, and the risks can be mitigated by establishing a regulatory framework and ongoing monitoring. This conclusion пришли in the Royal United Services Institute (RUSI).

“NFTs are most often purchased with cryptocurrency on online marketplaces. Cryptocurrencies are usually used for malicious activities, such as concealing the source of criminal proceeds,” the report notes.

Experts say the digital aspect of this sector creates space for “other new risks.” In particular, they pointed to the possibility of counterfeits and hacking attacks. In August, collector Pranksy bought a work allegedly owned by anonymous artist Banksy. He paid 100 ETH for it, and a few hours later a duplicate token was sent to him.

In September, Messari analyst Chase Devens became one of the victims of a phishing attack on the NFT project Aurory Project on the Solana blockchain. The attacker siphoned cryptocurrency and NFTs more than $1 million from victims’ wallets.

“Criminals can hack users’ accounts on trading platforms and transfer NFTs to their own accounts. After that, the hacker can quickly sell the stolen tokens and attempt to launder the proceeds,” said RUSI.

Researchers see the remedy in implementing KYC-procedures, as well as the implementation of two-factor authentication for platform users. RUSI noted that a registry of stolen or counterfeit NFTs — an analogue of the list used in the traditional art market to prevent the resale of such items at auctions — could be effective.

Earlier in October, an unknown organized a pre-sale of counterfeit NFTs released on the Solana blockchain, and disappeared with users’ funds.

At the end of November, a collection of Star Wars stormtrooper helmets as art objects from the Art Wars project was sold as NFTs without the artists’ knowledge.

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