• Cardano (ADA) boss on NFTs and why money launderers are flocking to them

  • The high-profile sales have continued with no signs of letting up in recent weeks as trading volumes have surged and the NFT revival continues.

    While proponents say this indicates a “cultural shift,” others believe there’s more to it than meets the eye. That is, sky-high prices are driven by money laundering.

    In sharing his thoughts on the situation, Charles Hoskinson, owner of Input-Output Global, believes there is such a thing happening. But Charles Hoskinson pointed out that this situation is not unique to cryptocurrencies.

    So, is this a practice we should all suffer through with a bitter smile?

    How do money launderers use NFTs?

    When people think of NFTs, most people think of the absurdity of paying hundreds of thousands or even millions for digital artwork. It’s even more confusing when NFTs can be copied for free.

    Several NFT pieces have recently been sold for jaw-dropping prices, illustrating this point once again. This includes CryptoPunk #7252 which sold last month for 1,600 ETH ($5.33 million). There was also Fidenza #313 which sold last month for 1,000 ETH ($3.35 million).

    Proponents argue that while easily copied, its value proposition comes from the status that ownership confers, and the bragging rights that come with it.

    Nonetheless, for the average person on the street, this interpretation alone is still not true when it comes to the price of works in high demand.

    Hoskinson describes the current situation as an “irrational exuberance” or a vehicle for money laundering. He added that it is possible to use NFTs to launder money because many platforms are non-regulated and do not require registration.

    What usually happens is that, using another account, the money launderer sells the NFT to himself. The dirty cryptocurrency is then laundered by giving the legitimate source of the proceeds.

    “And then what you do, you have this picture of a rock, and you sell it to yourself through your other account, which is “some other person”. That person buys that rock NFT and you’re effectively just moving money from an illegal source to a legitimate source.”

    Money laundering goes much deeper than NFT

    However, Hoskinson points out that this is not a cryptocurrency issue, but is being done in other sectors as well.

    He further expanded that it is common for real-world artwork to be used for money laundering in similar situations. Also, there is a “soft corruption” when it comes to paying for speeches.

    “We’ll pay you $100,000 to do a 30-minute presentation, or something like that. I don’t care what you talk about, you can talk about the weather.”

    But with U.S. regulators signaling sweeping cryptocurrency reform, the NFT is likely to be singled out.

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