Category: News, NFT News

‘NFTs are vulnerable to criminal use,’ says US Treasury Department risk assessment, citing problems with management systems to combat money laundering

On May 30, 2024, the U.S. Treasury Department released its first financial risk assessment report on ‘NFTs (Non-Fungible Tokens).’ The Treasury Department severely criticized platforms that handle NFTs for neglecting measures against money laundering, etc.

Illicit Finance Risk Assessment of Non-Fungible Tokens – Illicit-Finance-Risk-Assessment-of-Non-Fungible-Tokens.pdf
(PDF file) Treasury Describes Non-Fungible Tokens as ‘Highly Susceptible’ to Use in Financial Crime

US Treasury Department Releases First-ever Finance Risk Assessment Report on NFTs – NFT News Today

In the Treasury Department’s view, NFTs are easily used by criminals for money laundering and regulatory evasion, and platforms that handle NFTs are not in a position to adequately manage such crimes. Therefore, the Treasury Department has recommended that platforms apply further regulatory measures.

The Ministry of Finance is urging citizens to be careful, not only because of the financial issues surrounding NFTs, but also because NFTs themselves are a prime target for criminals.

According to the Ministry of Finance, fraud involving NFTs is rampant, and there are also concerns about intellectual property issues, such as misrepresentation of rights and violations of copyright and trademark protections.

The Ministry of Finance used the case of North Korea as a case study, explaining how North Korea has used NFTs to raise funds for its military, as well as the methods used by related hacker groups to steal digital assets, and called for awareness of the risks that are emerging.

In 2022, an online game that advertised that you could obtain NFTs just by playing was hacked, and it was discovered that more than 75 billion yen worth of virtual currency was stolen. Subsequent investigations revealed that the mastermind was a North Korean criminal group.

It turns out that a North Korean cybercrime group was involved in the ’75 billion yen theft from NFT games’ – GIGAZINE
NFT News Today, which covers NFT-related news, wrote, ‘The Treasury Department’s publication of this assessment report marks an important step in understanding and addressing the risks associated with NFTs. Regulatory clarity and consumer protections are essential to navigating the evolving NFT landscape. Continued collaboration between stakeholders is essential to ensuring a safe and transparent NFT market. Only through awareness, education, and appropriate regulation can the industry protect against potential risks and security concerns.’

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