The two most popular NFT-related crimes, money laundering and wash trading, resulted in illicit profits of US$10 million in 2021, according to a report released Wednesday by blockchain forensics firm Chainalysis.
- While the US$10 million of global NFT criminal activity is relatively small, Chainalysis reported a spike in the use of illicit funds to purchase NFTs in the third quarter (to more than US$1 million compared to less than US$250,ooo in 2Q) and growth in the fourth quarter (to US$1.4 million).
- Wash trading, the most popular crime in NFT trading, is the sale of an asset between accounts owned by the same entity, thereby having the potential to artificially elevate the price of the NFT.
- The researchers identified 262 users who sold an NFT more than 25 times to accounts it was associated with, resulting in US$8.5 million in profits (including wash sales that measured US$416,000 in losses).
- Growth in NFT sales exploded in 2021 to US$44 billion from US$104 million the prior year, according to Chainalysis.
- Chainalysis tracked US$8.6 billion worth of cryptocurrency-based money laundering in 2021.