Money laundering and theft, besides counterfeiting, are the primary crimes that grew with the sale of NFTs. The English researchers say that some hackers also use those files to send encrypted information.

Allison Owen and Isabella Chase are researchers at the Royal United Institute Services (RUSI) Research Center for Financial Crime and Security. They recently published an article describing the possibilities NFTs have uncovered in the art world.

Owen and Chase explain that those tokens represent a seal of authenticity that what buyers are acquiring is unique, original, and theirs.

Artists also see NFTs as ways to generate value with the sales of their works, besides the original, as happens with physical art.

Crimes that the Sale of NFT Contributes to Committing

Besides mentioning the potential of that technology for the artistic community, the researchers analyze the possible crimes it could originate or enhance.

The expansion of those methods of producing and trading goods can include bad uses, as has happened in the history of humanity. The crimes mentioned are not unique to NFTs, or not all are.

The Use of NFTs to Commit Money Laundering

Many token development companies and auction houses, among other actors, are concerned about money laundering.

In October, recognized NFT developer Dapper Labs and blockchain analytics firm Chainalysis signed an agreement to create monitoring tools. They aimed to establish when the funds used for purchasing digital work are illicit.

A growing number of criminals could be using ill-gotten money to purchase NFT, almost in line with the popularity of those products. Investors have paid multi-million-dollar sums for some of them, setting off alarms in the public and private sectors, governments, and the companies involved.

The Sale of NFTs Could Involve Counterfeiting and Theft

Traditional art is full of stories about theft and counterfeiting of very famous pieces, which the world of NFTs is beginning to see.

Owen and Chase indicate in their article that there were sales of fake NFTs, implying they were authentic this year. For example, a hacker breached the website of English street artist Banksy and placed a link to a supposed original token.

Sending Encoded Information Through NFTs

According to those English researchers, the third crime hackers could commit through NFTs is sending information encoded in those files.

They argue that those cybercriminals could hide data about a vulnerability in a security system and send it to another person in an NFT format.

How Users Can Avoid Those Crimes with NFTs

Owen and Chase outlined some solutions to reduce the risks from that new technological way of marketing artwork.

First, they recommend applying a form of registration, such as KYC (Know Your Customer), of users already using cryptocurrency exchanges. That implies requesting the personal and verified data of the person accessing the platform.

Second, they propose creating a register of fraudulent purchases, in which they list the NFTs that could be counterfeit or stolen. That already happens with physical art through the Art Loss Register.

Finally, they suggest using security features like two-factor authentication and other platform-specific measures to protect themselves from hackers.

Those alternatives could help prevent many crimes that obstruct the potential of NFTs. Furthermore, the authors point out that those solutions would not curb the growth of that market.

By Alexander Salazar

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