Non-Fungible Tokens (NFTs)

• Criminals use VPN connections to conceal their true IP addresses when buying or selling NFTs on online marketplaces, making it more difficult to verify the origin of transactions.
• By routing bids, purchases, and sales through different VPN endpoints, illicit actors can layer funds across multiple NFT transfers without revealing consistent geographic or account ownership patterns.

• Criminals execute numerous low-value NFT trades instead of a single high-value purchase, dispersing illicit funds below suspicious transaction thresholds.
• NFT marketplaces often lack robust AML monitoring for repeated small transactions, enabling smurf-like structuring in the digital realm.

When the automation script targets NFT marketplaces, it orchestrates rapid “wash-trades” of low-value NFTs between controlled wallets, fragmenting value and generating a dense on-chain trail that resembles legitimate collector traffic.

• Criminals mint or list NFTs on e-commerce-like marketplaces, artificially inflating prices by buying from themselves.
• Pseudonymous accounts and the ease of cross-border digital transfers provide additional anonymity benefits, allowing illicit funds to be laundered under the guise of art or collectible sales.

• Collusive "wash trading" inflates NFT prices beyond real market demand, enabling criminals to justify large sums as legitimate digital asset sales.
• Subsequent NFT resales at manipulated prices appear like normal market fluctuations, obscuring any link to illicit origins.

• Criminals engage in wash trading or self-dealing by selling NFTs among wallets they control, artificially inflating prices to disguise illicit fund origins as legitimate art proceeds.
• The pseudonymity of many NFT platforms and minimal KYC requirements hinder the identification of true beneficial owners.
• Staging repeated transfers across multiple wallets layers transactions, complicating audits and obscuring the paper trail.
• Ultimately, these manipulated NFT sales appear as credible art or collectible income, allowing illicit funds to enter the legitimate financial system under false pretenses.

• Criminals exploit metaverse-based NFTs by purchasing them with tainted digital assets, then reselling them to legitimate or collusive buyers to transform illicit proceeds into ostensibly 'clean' funds.
• Wash trading among linked accounts inflates or manipulates NFT prices, decoupling the final sale proceeds from the original criminal flow.
• Platform or code vulnerabilities can also be used to obscure ownership chains and distort valuations, adding another layer of opacity.

• Metaverse-based NFTs enable criminals to engage in wash trading: they repeatedly buy and sell the same tokens among colluding wallets, artificially inflating trade volume and prices.
• This tactic severs the traceable link to the initial stolen tokens, as the newly received proceeds appear to arise from legitimate NFT trades.
• Criminals may also exploit code vulnerabilities in NFT platforms to manipulate valuations, deepening transactional complexity and hindering detection by traditional AML systems.

• Criminals mint or trade NFTs—potentially tied to rare in-game items—on blockchain marketplaces, exploiting cross-chain bridges to move these assets across different ecosystems.
• By repeatedly transferring NFTs among various wallets or platforms, criminals complicate the transactional trail and obscure beneficial ownership.
• The unique and easily portable nature of NFTs allows them to serve as a cross-platform medium of exchange with limited identity checks, hindering AML monitoring.

• Wash trading of NFTs among related wallets at progressively higher valuations creates a false impression of strong interest and raises the perceived value.
• Pump-and-dump-like tactics involve criminals driving up an NFT’s price through orchestrated buys and media hype, then rapidly selling to unsuspecting buyers.
• Because NFTs are unique and lack uniform reference pricing, it becomes easier to fabricate “gains” from illiquid or novel assets.

• Perpetrators create or control multiple NFT marketplace accounts, trading the same token among themselves to inflate perceived demand and valuation.
• These repetitive self-bids and sales mask illicit money movements as legitimate transactions for digital collectibles, allowing criminals to justify large sums received as NFT trading proceeds.
• The lack of transparent beneficial ownership in many NFT platforms makes it challenging to identify collusive participants executing wash trades.

• Scammers launch new NFT collections, marketing them as exclusive digital art or utility-driven projects.
• Once enough buyers have purchased and hyped the NFTs, the fraudsters abandon the project, leaving collectors with worthless assets while they abscond with the funds.
• The light oversight of NFT marketplaces enables quick liquidation or fund redirection, reducing traceability.