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Art is crime [NFT artist funds seized]

art-is-crime.com

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Re: Art is crime [NFT artist funds seized]

#31

Post by chrismcb »

gizmo wrote: post #7

I haven't read the entirety of the page, but I think I got the main points. The artist claims he's in the clear because he paid taxes on his income he made by selling NFT artpieces created by him. 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…

Why should he did any of those things? Why is it his responsibility to make sure his customers are not crooks? Why does he need to get any info from his customers? Why does he need names, addresses and phone numbers?

Re: Art is crime [NFT artist funds seized]

#32

Post by chrismcb »

closewith wrote: post #28
etrautmann wrote: post #17

Earlier quoted context omitted.

I'm not sure your argument makes sense - Does conducting your business in a serious way as an artist involve finance-levels of know-your-customer regulatory compliance? Most business, aside from finance, do not know much about who's buying whatever product they're selling. Individual artists shouldn't be on the hook to do background checks on art buyers.

With respect, since the introduction of AML5, art dealers and auction houses are subject to KYC/AML requirements (as so-called "high value dealers"). If the transactions exceeded €10,000, the company would be obliged to be compliant or, as many do, hire a dealer who is compliant to act on their behalf.

But why? I realize that there is an arbitrary 10000 number that governments use to spy on it's people. But why? Why should the people follow these insane rules? In the us this is potentially unconstitutional unless it is interstate trade.

Re: Art is crime [NFT artist funds seized]

#33

Post by closewith »

muffinthem wrote: post #29
closewith wrote: post #28

Earlier quoted context omitted.

With respect, since the introduction of AML5, art dealers and auction houses are subject to KYC/AML requirements (as so-called "high value dealers"). If the transactions exceeded €10,000, the company would be obliged to be compliant or, as many do, hire a dealer who is compliant to act on their behalf.

This is not fundamentally possible in peer to peer permissionless blockchains. The law as it is currently defined is not compatible with the technology and will need to be revised if the law wishes to consider NFT as high value art sale.

> This is not fundamentally possible in peer to peer permissionless blockchains.

That's nonsense. There's nothing preventing KYC for any business transaction. It won't happen on the blockchain, but entities operating in the EU who forgo compliance will end up subject to investigation when they interact with the financial system, as may have happened in this case (again, I'm not supposing that the OP did anything wrong).

> The law as it is currently defined is not compatible with the technology and will need to be revised if the law wishes to consider NFT as high value art sale.

This is complete nonsense. The medium of transaction is neither inherently compatible or incompatible with the law, and entities which try to use it as an excuse to avoid their compliance obligations will find themselves subject to government investigation and sanction.

The idea that you can pretend that a technical implementation can exempt you the law is so outlandish and absurd that I wonder if you're trolling?

Re: Art is crime [NFT artist funds seized]

#34

Post by muffinthem »

closewith wrote: post #33
muffinthem wrote: post #29

Earlier quoted context omitted.

This is not fundamentally possible in peer to peer permissionless blockchains. The law as it is currently defined is not compatible with the technology and will need to be revised if the law wishes to consider NFT as high value art sale.

> This is not fundamentally possible in peer to peer permissionless blockchains. That's nonsense. There's nothing preventing KYC for any business transaction. It won't happen on the blockchain, but entities operating in the EU who forgo compliance will end up subject to investigation when they interact with the financial system, as may have happened in this case (again, I'm not supposing that the OP did anything wron…

I am not saying KYC is not possible - I am saying the requirement that the seller does KYC - such as an invoice with customer details - on every transaction is not possible. Once an NFT is listed for sale through a permissionless contract, there is no way the seller can block a particular buyer, or demand an invoice or their private details before or after the sale. The buyer's tokens may have originated from a KYC-d exchange such as Coinbase or Kraken, but that information is not available to the NFT seller, and this is where the problem is with the OP website.

> The idea that you can pretend that a technical implementation can exempt you the law is so outlandish and absurd that I wonder if you're trolling?

I am not suggesting this exempts anybody from the law, I am suggesting the law is outdated and not compatible with current technology. If the law is that you must handle KYC upon receiving $10K USD in tokens, and an anonymous wallet sends you 10ETH in tokens, you should not automatically become a criminal and have your assets seized because of a law that was written before permissionless blockchain networks existed.

Re: Art is crime [NFT artist funds seized]

#35

Post by closewith »

chrismcb wrote: post #32
closewith wrote: post #28

Earlier quoted context omitted.

With respect, since the introduction of AML5, art dealers and auction houses are subject to KYC/AML requirements (as so-called "high value dealers"). If the transactions exceeded €10,000, the company would be obliged to be compliant or, as many do, hire a dealer who is compliant to act on their behalf.

But why? I realize that there is an arbitrary 10000 number that governments use to spy on it's people. But why? Why should the people follow these insane rules? In the us this is potentially unconstitutional unless it is interstate trade.

I am not a fan of the ever increasing state surveillance of private transactions, so don't expect a justification from me.

Presumably €10,000 is the trade-off value which the member states decided would be sufficient to make an impact on money laundering without imposing too much bureaucracy on small transactions.

> Why should the people follow these insane rules?

I don't necessary like them, but AML 4/5/6 are well-reasoned Directives that were written and negotiated in public and agreed on by all member states. They didn't receive much pushback during their drafting periods. If anything, leaks like the Panama Papers have made them popular.

As for why people should follow the law, that should be obvious. The state won't leave you alone to transact as you wish. Compliance failures lead to civil and criminal sanctions.

> In the us this is potentially unconstitutional unless it is interstate trade.

Fortunately, the EU is not in the US.

Re: Art is crime [NFT artist funds seized]

#36

Post by jsmith45 »

elil17 wrote: post #11

In countries where free expression is actually a crime, people don’t just get their money seized, they get arrested. There’s probably a due process issue here but that doesn’t mean “art is a crime.” If anyone speaks Latvian I would love to know what those legal documents he posted say the crime he committed was.

From a quick machine translation, the documents basically say that NFTs (as crypto) are high risk transactions often associated with criminal enterprises, and untraceable money flows.

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.

Re: Art is crime [NFT artist funds seized]

#37

Post by pjbeam »

pjc50 wrote: post #8

Reminds me of all the US cops just seizing cash and forcing a lawsuit for it to be returned. 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 s…

Is the implication then that if I sell lemonade out on the street and you give me cash for one that my funds should be seized because I don't know the provenance of the cash?

Re: Art is crime [NFT artist funds seized]

#38

Post by closewith »

muffinthem wrote: post #34
closewith wrote: post #33

Earlier quoted context omitted.

> This is not fundamentally possible in peer to peer permissionless blockchains. That's nonsense. There's nothing preventing KYC for any business transaction. It won't happen on the blockchain, but entities operating in the EU who forgo compliance will end up subject to investigation when they interact with the financial system, as may have happened in this case (again, I'm not supposing that the OP did anything wron…

I am not saying KYC is not possible - I am saying the requirement that the seller does KYC - such as an invoice with customer details - on every transaction is not possible. Once an NFT is listed for sale through a permissionless contract, there is no way the seller can block a particular buyer, or demand an invoice or their private details before or after the sale. The buyer's tokens may have originated from a KYC-d…

What you are describing is the use of permissionless contracts to avoid AML/KYC compliance law, which is partly what the Directives are designed to criminalise.

> I am not suggesting this exempts anybody from the law, I am suggesting the law is outdated and not compatible with current technology.

AML 5 came into law on the 10th January 2020 (with an enforcement window for transposition into national laws). The law is, as said before, partly designed to close loopholes in the previous Directives that allow high-values transactions to avoid regulation. The law is - for better or worse - keeping up to date. It's simply the case that you don't like the regulation being imposed.

> If the law is that you must handle KYC for > 10ETH purchase, and an anonymous wallet sends you 10ETH in tokens, you should not automatically become a criminal and have your assets seized because of a law that was written before permissionless blockchain networks existed.

I think this really puts your bias front and centre.

Re: Art is crime [NFT artist funds seized]

#39

Post by closewith »

pjbeam wrote: post #37
pjc50 wrote: post #8

Reminds me of all the US cops just seizing cash and forcing a lawsuit for it to be returned. 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 s…

Is the implication then that if I sell lemonade out on the street and you give me cash for one that my funds should be seized because I don't know the provenance of the cash?

If the transaction value at your lemonade stand exceeds €10,000, then in the EU, you are required to verify the identity of the beneficial owner of the funds, thanks to AML5.

Re: Art is crime [NFT artist funds seized]

#40

Post by closewith »

chrismcb wrote: post #31
gizmo wrote: post #7

I haven't read the entirety of the page, but I think I got the main points. The artist claims he's in the clear because he paid taxes on his income he made by selling NFT artpieces created by him. 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…

Why should he did any of those things? Why is it his responsibility to make sure his customers are not crooks? Why does he need to get any info from his customers? Why does he need names, addresses and phone numbers?

I know you're looking for idealogical reasons, but the answer is because it's the law of the land and failure to do so will result in state sanction.
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