Cent, a platform for selling non-fungible tokens (NFTs), has suspended a majority of its transactions because people have been selling content that isn’t theirs, Reuters reported Saturday (Feb. 12).
Buying and selling on the Cent marketplace was halted on Feb. 6, and Cameron Hejazi, the platform’s founder, has said this fraud is a “fundamental” issue with the digital assets world.
Last year, NFT sales soared to roughly $25 million, according to Reuters, leaving people “baffled” on why money is being spent on items that don’t really exist and can be seen for free. Last March, Cent sold an NFT of one Jack Dorsey’s first tweets for almost $3 million.
Hejazi was quoted by Reuters as saying there’s “a spectrum of activity that is happening that basically shouldn’t be happening — like, legally.”
He said there were three main issues: people selling unauthorized copies of other peoples’ NFTs, people making NFTs of content not belonging to them and people selling sets of NFTs resembling a security.
All of these things had been “rampant,” and he added that some users were also “minting and minting and minting counterfeit digital assets.”
These issues might come into more focus with more brands joining the virtual metaverse, or Web 3. Even OpenSea, the largest NFT platform, has said the problem is real and that over 80% of the NFTs minted for free on its platform were “plagiarized works, fake collections and spam.”
PYMNTS wrote that the U.S. Treasury has identified the NFT market as one ripe for use in financial crimes, with a recent report saying there are several reasons it’s attractive, including the high-dollar values and easy transportability.
Some participants have begun implementing procedures for due diligence on buyers and sellers of NFTs, which can help with money laundering — though the voluntary nature of it might render it moot.
The Treasury has also suggested other solutions, such as government support for private sector information sharing programs to encourage transparency.