New Record for the Xrpl NFT Sales Set, Could It Be a Money Laundering Case?

New Record for the Xrpl NFT Sales Set, Could It Be a Money Laundering Case?

One of the products from the “XRPL Punks” collection has sold for 108,900 XRP, the equivalent of $44,000. According to onXRP, a modular ecosystem based on the XRPL, the sale marked a new record number on the XRP Ledger.

XRPL NFTs Gains Traction with Rising Sale Prices

The announcement was made over Twitter, revealing that the sale was carried out through an open auction involving NFT #8811. Notably, the buyer’s identity was left out. However, in the tweet, it was stated that the individual is well-known to the community.

The Xpunks NFTs, dedicated to the non-fungible Cryptozoic collectibles, is one of the most popular collections on XRP. Since the developers implemented the XLS-20 amendment in the fall, the total amount of Xpunks traded has reached 1.78 million.

The sale of this collection signifies that the XRPL collectibles are gaining traction, quickly becoming some of the most popular ones in the industry. This news comes less than a month after the introduction of the first NFTs on the XRP network. A year earlier, Ripple committed around $200 million for NFT exploration. Now, such development shows that the network’s efforts to foster NFT adoption may be finally paying off.

A Case of Money Laundering?

Like fine art, the value of NFTs can be unpredictable. That means there is much room for maneuvering regarding the perceived worth of a particular digital object. That also means that there is potential for money laundering. An NFT can be quickly transferred from one wallet to another, similar to what happens with cryptocurrencies.

Since 2017, over $8 million of illicit funds have been laundered through NFT platforms. That is less than .02 percent of all illegal trading activity. Between July 2021 and July 2022, over $100 million worth of NFTs were reported stolen through scams. On average, the perpetrators could make a profit of around $300,000 from these types of illicit activities. In July 2022, over 4,600 NFTs were stolen, the highest monthly total recorded.

The US-based Tornado Cash was the primary source of $137.6 million of the illicit funds transferred through NFT marketplaces. It was also the most frequently used tool by hackers and scammers for laundering proceeds. Due to its widespread use by threat actors, effective sanctions screening should be carried out on NFT platforms.

In a recent incident, Crypto Twitter claims that FTX uses non-fungible transfer methods to bypass withdrawal restrictions for elite users. Cobie, a host on UpOnly, noted that a certain address had withdrawn over $21 million worth of Tether from FTX and transferred it to another.

Cobie states that the address withdrawing money from a certain account is a Bahamian account. They then bypass the block by selling NFTs on the FTX platform. Notably, NFTs are an effective money laundering tool because they are purchased on the public ledger.

Due to that nature, these digital assets provide a level of anonymity as buyers are not identified. That makes it very easy for money launderers to open accounts and move their funds around, which could also be why the XRPL NFT sales are up as crypto sanctions increase. However, there are no clarified claims on the XRP rise being a money laundering case.

Measures Need to Be Taken

The private sector needs to increase its transparency in the NFT space to minimize the risk of money laundering and terrorism financing. That can be done by sharing information and applying anti-money laundering and counter-terrorist financing regulations.

According to the Royal United Services Institute, most NFTs are purchased using cryptocurrencies on online platforms. That means that the AML risks associated with these transactions should also be considered when it comes to NFTs. In addition, the institute warned about the potential for an art heist, where a criminal actor could easily access the accounts of users on NFT marketplaces and transfer their funds.

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