Tue. Sep 26th, 2023

Last year, the nonfungible token (or NFT) market skyrocketed.

Ethereum smart contracts “related with NFT marketplaces and collections” received a total of $44.2 billion in bitcoin in 2021, according to data from blockchain analytics firm Chainalysis. Decentralized applications and NFTs are powered by smart contracts, which are just collections of code.

As a result, scammers saw a way to cash in on the buzz.

“Small but apparent” money laundering has been identified in NFTs in a recent report by Chainalysis based on its own investigation. In the third quarter of 2021, “substantially” more than $1 million worth of cryptocurrencies was transmitted to NFT marketplaces by illegitimate addresses, Chainalysis reported. Since then, the figure has dipped to little about $1.4 million. Chainalysis used illicit addresses, or addresses connected with criminals like scammers, to determine if money obtained illegally was being used to purchase NFTs. ETH and WETH-based NFTs were the only ones examined by Chainalysis, which declined to identify the exact NFT platforms it examined.

It’s worth noting that.

compared to the whole amount of cryptocurrency-based money laundering, the amount of possible NFT-based money laundering in 2021 is a “drop in the bucket.” This is a major threat to the trustworthiness of NFTs and should be taken more seriously by marketplaces, regulators, and law enforcement, according to the firm Kim Grauer, director of research at Chainalysis, advises investors to look for NFT marketplaces that have safeguards in place to prevent money laundering and other fraudulent conduct. The NFT market could benefit from selecting reliable markets According to Grauer, “our analysis reveals that thanks to the inherent transparency of blockchains, NFT platforms with the correct data and tools can successfully monitor their platforms to shut down and prevent abuse such as money laundering,” CNBC Make It. According to her, “NFT platforms should adopt restrictions against wash trading on their platforms to establish more trust in this asset class”

By Adam

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