of Ministry of Finance Warning to NFT fans: use at your own risk.
Department store The evaluation was announced A study published on Wednesday (May 29) found that while non-fungible tokens (NFTs) have little to no connection to terrorism financing or other such activities, they are “highly vulnerable” to theft and fraud.
“Furthermore, criminals are using NFTs to launder proceeds from their predicated crimes, often combining them with other technologies and transactions aimed at obscuring the source of their illicit funds,” the assessment states.
“Criminals may exploit vulnerabilities related to the characteristics of NFTs, the assets or rights they reference, and U.S. and international regulatory frameworks.”
The Treasury Department found that cybersecurity vulnerabilities, challenges related to copyright and trademark protection, and hype and price fluctuations around NFTs, which are blockchain-based digital assets, could allow criminals to commit fraud and theft related to NFTs and their platforms.
Further complicating the issue is the lack of internal controls among NFT companies and platforms to prevent risks of market integrity, sanctions evasion, terrorist financing and money laundering.
NFTs emerged from the crypto bull market of 2021, with proponents pitching them as a way for everyday customers to participate in the digital currency market. Since then, NFTs have declined in popularity, with NFT sales falling 63% in 2023.
GameStop, which announced an NFT marketplace in the summer of 2022, decided earlier this year to exit the non-fungible token business, citing ongoing regulatory uncertainty surrounding cryptocurrencies.
Meanwhile, the larger cryptocurrency market is recovering, and with it a surge in crypto-related crime.
According to a March FBI report, Americans filed more than 43,000 complaints about cryptocurrency scams last year, and losses from crypto-related scams and fraud jumped 53% from the previous year to $3.9 billion.
“These scams are designed to lure targets with promises of big investment returns,” the FBI said.
Driving this increase is the proliferation of “scam factories” that hold tens of thousands of illegally trafficked people captive and defraud unsuspecting foreigners.
One of the most common methods is “pig slaughter,” where scammers use false identities to build relationships with their victims across dating apps, social media platforms, professional networking sites and encrypted messaging apps.
These scams are designed to build trust, and usually start as romance or confidence scams, before evolving into cryptocurrency investment scams when the fattened “pig” is “slaughtered.”
