NFTs and Financial Crime

Categories : AML-CFT, Regulation of Digital Financial Services


Elliptic’s data-driven analysis into the prevalence of money laundering, terrorist financing, scams and sanctioned entities finds that these financial crimes represent a small but notable portion of overall non-fungible token (NFT)-related trading activity.

Key findings include:

  • Over $8 million of illicit funds has been laundered through NFT-based platforms since 2017 – representing 0.02% of trading activity originating from known sources.
  • Over $100 million worth of NFTs were publicly reported as stolen through scams between July 2021 and July 2022, netting perpetrators $300,000 per scam on average. July 2022 saw over 4,600 NFTs stolen – the highest month on record – indicating that scams have not abated despite the crypto bear market.
  • Tornado Cash, a US-sanctioned mixer, was the source of $137.6 million of cryptoassets processed by NFT marketplaces and the laundering tool of choice for 52% of NFT scam proceeds before being sanctioned by OFAC in August 2022. Its prolific use by threat actors engaging with NFTs further emphasizes the need for effective sanctions screening by NFT platforms.

This report provides and explains the trends summarized above to understand the nature, origin and scale of these select financial crime risks. Guidance is also provided on regulatory matters concerning NFTs and the utilization of blockchain analytics to detect, investigate and prevent exposure to illicit activity. The report is intended for all stakeholders engaging with NFTs. It provides red flag indicators and recommendations to improve the safety, security and enjoyment of partaking in this rapidly growing industry.