The space of NFTs is flooded with news of jaw-dropping sales that many find bizarre. Of course, art is subjective and what might be questionable to many, might be exquisite to some. But there might be something more to this burgeoning market for artistic freedom, according to crypto analyst Mr. Whale. In a <a href="https://cryptowhale.medium.com/money-laundering-tutorial-how-to-launder-millions-with-nfts-7530b7079a78" target="_blank" rel="nofollow noopener">recent post</a>, the early Bitcoin adopter attributed the recent spike in NFT sales to a “twisted scheme” of money laundering and tax evasions.

“Behind the facade of a bunch of bored rich dudes buying digital artwork at insanely high prices lays a sinister, and twisted money laundering scheme for crypto’s ultra-rich elites to make their illegal profits look legal.”
<h2>Mr. Whale Explains How NFTs Are Used to Evade Taxes and Launder Money</h2>
Mr. Whale pointed out that NFTs usually escape scrutiny because every <a href="https://www.cryptoknowmics.com/news/socialist-cyberpunk-housing-nft-artwork-showcased-at-taobao-maker-festival/">artwork</a> is subjective. In this way, they are no different from traditional art which has been used for centuries for illegal financial flows, he added.

Laundering money via NFTs is not very difficult, as Mr. Whale Explains. Individuals attempting illicit transfers can easily buy tokens from themselves or claim that a certain amount of money was used to purchase a legitimate artwork and receive tax exemptions. In April, USA Today journalist, Isaiah McCall, had demonstrated an instance of money laundering through this approach.

“If you have $1 million in illegal money, you would spend $1 million on your own NFT. You can do this yourself or use a trusted third-party account. Then you resell the trash for nothing and bank the profits.”

To further elaborate the use of NFTs in money laundering, Mr.Whale quoted Cat Graham, an adjunct faculty member in the Art &amp; Design department at Lasell University. Graham proposed that moving assets around in the blockchain is a better alternative for tax thieves and money launderers:

“It could possibly be even easier to move dirty funds around because it is tied to a decentralized currency and the fact that there are no physical artworks to have to transport or store in off-shore tax haven warehouses.”
<h2>Regulations Could be Coming for NFTs as Well</h2>
In his post, Mr. Whale was confident that a few years from now the NFT <a href="https://www.cryptoknowmics.com/news/hello-nfts-are-you-just-a-bubble-or-you-are-here-to-stay/">craze</a> would fade and the market would be heavily regulated. He added that many digital asset marketplaces could also be forced to comply with KYC/AML regulations, unlike now.

NFT purchases could also be subjected to stricter tax laws, although, that might already be underway. In April, CNBC Squawk Box had reported that the NFT buyers in the US will have to pay a capital gains tax of up to 20% while filing their returns.

Crypto Analyst Mr. Whale Says NFTs are Being Used for Money Laundering

In a recent post, Mr. Whale attributed the recent spike in NFTs sales to a “twisted scheme” of money laundering and tax evasions.

Divya is a postgraduate from Jawaharlal Nehru University specializing in International Relations and a professional writer with more than 5 years of experience writing for the web. She is an avid reader interested in the global financial system and the effects of decentralization. At Cryptoknowmics, she hopes to deliver clear and understandable content to inform readers about the latest events in the crypto sector.

Crypto Analyst Mr. Whale Says NFTs are Being Used for Money Laundering

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