U.S. Treasury Warns of New Scam

(BrightPress.org) – The United States Treasury Department determined that non-fungible tokens (NFTs) and NFT platforms are “highly susceptible to fraud and scams following the agency’s first risk assessment into NFTs. The U.S. Treasury issued a report on Wednesday, May 29th that indicates NFTs can be used in money laundering, as a way to avoid sanctions, and are frequently subject to theft. Although the report did say that NFTs have the potential to be used to fund terrorist organizations, the occurrence is rare.

The report said that some NFT and NFT platforms do not have the proper cybersecurity protections or controls in place to counter illicit activity. The report suggests countermeasures such as utilizing law enforcement authorities and analyzing public blockchain data could lower the risk of NFTs being used for criminal activity. The U.S. government can take action including raising awareness, enforcing existing laws, and considering new regulations to mitigate outstanding risks associated with NFTs and NFT trading platforms.

Brian E. Nelson, the Under Secretary of the Treasury for Terrorism and Financial Intelligence, said the risk assessment shows the Treasury Department’s willingness and commitment to analyzing and reducing threat risks of newer technologies. Nelson said the information obtained is communicated to the industry and law enforcement. Nelson also said he encourages the private sector to use the information to assess their own risks and create strategies to prevent the illegal use of NFTs.

Although NFTs are digital assets and are built using the same type of programming as cryptocurrency, NFTs cannot be traded or exchanged for one another because they are not equal in value. Each NFT has a unique signature and authentication which makes its value unique.

NFTs provide an opportunity for artists to monetize their creations without the need to rely on galleries or auction houses. The art can be sold directly to consumers. Artists can embed their signature in an NFT’s metadata and even program in royalties to receive a percentage of the sale if their art is sold to a new owner.