The author asked for guidance:
>I called the VID (Latvian State Revenue Service) and asked in detail what I should do. I was told that I should first register as a self-employed person with the profession of an artist. And I have to convert my income into fiat and pay tax on the income in fiat because cryptocurrency is not money in Latvia.
...followed it by converting to Euros and paying taxes and then still had his bank account frozen for half a year without any further clarification on what he did wrong or how to fix it.
I have no opinion as to the legitimacy of the criminal accusations, but having correctly paid tax liabilities would not be a defence.
Point being, if you have income and you call it income then your government can tax you and they can demand payment in their local currency. Forget crypto, they can force you to convert dollars to euros as well.
As for NFTs I don't think they need regulation, a person sells another person the golden gate bridge as a concept, so long as they pay sales tax who cares. No false advertisement there.
However, it's an inherent risk with crypto if the law requires all your income to be explicable. i.e.
>> The decision to arrest stated that I was receiving money from Coinbase, and therefore it is impossible to trace the source of funds
It's not clear if he knew who his counterparties were? (natural persons, not accounts)
I see the comment thread is going to be people just assuming guilt or innocence based on a cursory reading of this, which is going to be a mess.
Disappointing.
However, he gives no indication (as far as I can tell) that he has any kind of information on his customers. Does he have invoices? Did he collect name, address, and phone number for each customer? Did he make a reasonable effort to see if his customers were not obvious crooks? He published transactions from various crypto chains, but that doesn't prove anything except that crypto transactions have taken place.
The author rants extensively about how corrupt and illegal the government's actions are, but he provides no evidence that he conducted his business in a serious and professional way. He feels like his actions should be legal, but it's not obvious that he hasn't inadvertently facilitated money laundering. After all, if he's a popular NFT artists then people with illicitly gained crypto could easily have been trading his NFT art to launder their money.
I think it's pretty likely that much of last year's NFT bubble was the result of scammers/fraudsters/ponzi operators looking to obscure the source of their new wealth, and this guy happened to be a big beneficiary of it.
<edits for clarity>
A car dealership can’t sell somebody a Lamborghini if they want to pay with crumpled $20 notes. An art dealer can’t buy a Mondrian that the seller claims they found in their granny’s attic.
I don’t understand how this is controversial.
His records and sales are public on the site and easily traceable, far more transparently given than most corporate and celebrity NFT sales that have happened without issue in the last two years.
money laundering laws in germany require banks to verify every transfer above 1000 euro. cash payments of more than 10000 euro need to be documented as well.
i believe the rules are similar across the EU.
what's unclear is how that relates to cryptocurrency. does the source of the cryptocurrency have to be verified, or just the source of the fiat currency when cryptocurrency is sold for?
A bar that takes cash cannot prove they're not money laundering, therefor it doesn't matter if the government seizes their assets. That is essentially what your argument says.
It's obvious you're not on board with NFTs, and that's fine. What isn't fine is making blanket assumptions that everyone who sells art in the space is a fraud or a scammer. It's a very stupid opinion, with no basis in knowledge of the space, the ability to track transactions, due process, etc.
This isn’t about honest businesspeople having to meet some impossible burden of proof. This is about selling 10 million worth of product and not bothering to figure out where the money came from.
They think instead of being legit art sales, the NFT sales where part of a complex scheme through which he was laundering money. (Likely this scheme amounts to selling the art to himself. It is not especially difficult to have your various criminal wallets buy NFTs from yourself, making it look like legit purchases. Alternatively he and a ring of criminal associates could be buying nfts from each other with their dirty funds.)
The documents provide basically no indication of them having any evidence of this beyond "large amounts of money" moved via crypto. The documents even make it sound like that is their only evidence. But the documents claim that because they have reasonable suspicion that the money came from crimes, they can seize it.
The documents make it sound like money laundering is technically only illegal if the original source of the money is illegal, but make no effort to establish that the pre-laundered funds are criminal, and point out that the law does not require them to identify the crime from which the funds were originally obtained.
The assertion in the arrest documents seems to be basically that making a lot of money by selling NFTs is in itself sufficient cause to believe that money laundering of illegal funds was occurring, which provides sufficient justification for seizing the funds.
That's the thing about scams. You don't have to listen to a word of anybody's rationalizations about these kinds of things. You just look at the money flows. If it banks like a scam, it's a scam, end of story.
Art is not illegal. Money laundering is.
