Israel authorities investigate NFT founders for possible tax evasion
Two developers of non-fungible tokens (NFTs), who neglected to record over $2.2 million in earnings, are in the sights of Israel’s tax authority.
Countless “Western Wall NFTs” allegedly sold without filing taxes
According to a report from the Tax Authority on Friday, Jerusalem is looking into the possibility that two NFT developers failed to disclose earnings of almost 8 million NIS, worth approximately $2,2 million, from the sale of an NFT-based 3D scan of the Western Wall stones.
The probe comes after the recent arrest of a Tel Aviv-based graphic designer charged with identical offenses.
Avraham Cohen, a Jerusalem resident, and Antony Polak, a Har Adar resident, are the suspects. According to their website, holyrocknft.com, the developers were aiming to “combine the corporate world and technological advancement with Jewish faith and soul.” The two allegedly sold several NFTs through the website, per the Tax Authority.
Based on investigative sources, the suspects have sold 1,700 pieces of art since 2021 and received 620 ether (ETH) in exchange, which at the time of the transactions was equivalent to about NIS 8m.
The findings show that although these revenues are business earnings, the two did not disclose them. A further hint of illegal property concealment is the fact that some of the money received by the suspects was moved across digital wallets.
The Israel Tax Authority disclosed the suspects were released under stringent restrictions by Judge Amir Shaked of the Jerusalem Magistrate’s Court, who presided over the case. The suspects had to comply with these demands, which included handing over their digital wallets that had some ETH obtained from sales.
Tax authority: The investigation is still ongoing
According to the project’s website, sales of Holy Rocks NFTs have been halted as the legal proceedings are ongoing. However, the team behind the website stated that all other activities planned for the community would take place as scheduled.
Israel still lacks a thorough regulatory framework for digital assets. Recently, the country’s public stock market suggested regulations allowing certain clients to trade them, and the Bank of Israel released guidelines for governing and monitoring stablecoin-related activity.