Non-fungible tokens (NFTs) can be used to launder money or attract the attention of hackers, while regulatory frameworks and ongoing monitoring can help mitigate risks. This is the conclusion reached at the Royal United Defense Research Institute (RUSI).
“NFTs are most often bought with cryptocurrency in online markets. Cryptocurrencies are commonly used for malicious acts such as hiding the source of criminal proceeds, ”the report says.
What are the risks associated with NFT
According to experts, the digital aspect of this sector creates space for “other new risks”. In particular, he pointed to the possibility of creating forgeries and hacker attacks. In August, collector Pranksy acquired the work allegedly belonging to the anonymous artist Banksy. He paid 100 ETH for it, and a few hours later he was sent a duplicate token.
In September, Messari analyst Chase Devens became one of the victims of a phishing attack on the Aurory Project NFT token issuance on the Solana blockchain. The attacker withdrew more than $ 1 million worth of cryptocurrencies and NFTs from the victims’ wallets.
“Criminals can hack user accounts on marketplaces and transfer NFTs to their own accounts. After that, the hacker has the opportunity to quickly sell the stolen tokens and try to launder the proceeds, ”said RUSI.
The researchers see the solution to the problems listed in the report in the implementation of KYC procedures, as well as the implementation of two-factor authentication for platform users. RUSI admitted that creating a register of stolen or fake NFTs is a viable method – a similar list used in the traditional art market, preventing such lots from being resold at auction.