After cryptocurrencies, money laundering via NFTs next big worry

business-standard.com:

After serious concerns were raised on cryptocurrencies and their misuse for money laundering and hawala-based transactions by terror groups and criminals, a new report has claimed that money laundering through the buying and selling of non-fungible tokens (NFTs) is becoming a growing sector.

According to a report by Blockchain data platform Chainalysis, they found a small but growing portion of activity on NFT marketplaces that could be attributed to money laundering.

"While money laundering in physical art is difficult to quantify, we can make more reliable estimates of NFT-based money laundering thanks to the inherent transparency of the Blockchain," the report said late on Wednesday.

The value sent to NFT marketplaces by illicit addresses jumped significantly in the third quarter of 2021, crossing $1 million worth of cryptocurrency.

The figure grew again in the fourth quarter, topping out at just under $1.4 million.

"In both quarters, the vast majority of this activity came from scam-associated addresses sending funds to NFT marketplaces to make purchases," the report informed.

Both quarters also saw significant amounts of stolen funds sent to marketplaces as well.

"Perhaps most concerningly, in the fourth quarter, we saw roughly $284,000 worth of cryptocurrency sent to NFT marketplaces from addresses with sanctions risk," said the researchers.

NFTs can store data on blockchains and that data can be associated with images, videos, audio, physical objects, memberships, and countless other developing use cases.

NFT popularity skyrocketed in 2021. Chainalysis tracked a minimum $44.2 billion worth of cryptocurrency sent to ERC-721 and ERC-1155 contracts -- the two types of Ethereum smart contracts associated with NFT