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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]

#41

Post by malfist »

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…

Designing something that breaks the law, does not mean you don't have to enforce the law, or that the law needs to be updated and "made compatible"

If I sold a car that was deliberately unsafe, I wouldn't expect people to come to my company's defense and say that being safe in my car isn't possible and therefor the law is outdated and not compatible with current technology.

Re: Art is crime [NFT artist funds seized]

#42

Post by muffinthem »

malfist wrote: post #41
muffinthem wrote: post #34

Earlier quoted context omitted.

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…

Designing something that breaks the law, does not mean you don't have to enforce the law, or that the law needs to be updated and "made compatible" If I sold a car that was deliberately unsafe, I wouldn't expect people to come to my company's defense and say that being safe in my car isn't possible and therefor the law is outdated and not compatible with current technology.

Laws change as society and technology advances. If your argument is that every permissionless NFT sale is illegal and criminal because it cannot be KYC’d, my argument is that this law is dumb and needs to be rewritten given that many people and companies are now exploring NFTs as legal and taxed income, and most celebrities and companies selling NFTs in the last two years are not going through the same hardships as the OP.

Re: Art is crime [NFT artist funds seized]

#43

Post by em-bee »

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?

it is his responsibility.

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?

Re: Art is crime [NFT artist funds seized]

#44

Post by witheld »

bdr wrote: post #20
witheld wrote: post #2

I don’t believe him. It sounds to me like he played the usual scheme, having people pay for his NFTs to inflate their value- while sending the funds back.

This isn't true, and also makes no sense. (How would he have paid taxes? What money would the police have seized?) Speaking from first-hand experience, there's a significant community of collectors who like and will buy Shvembldr's work.

The money from the purchases after the value is inflated.

Re: Art is crime [NFT artist funds seized]

#45

Post by etrautmann »

gizmo wrote: post #25
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.

As a business you have to issue invoices and you also have a responsibility to stop obviously criminal behavior. 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.

Neither of your examples seem obvious or objectively criminal, or uncontroversial for that matter. If you pull back from Lambo to a Civic, is this still obviously criminal?

classifying suspicious transactions is a weird and dangerous path to legislate.

Re: Art is crime [NFT artist funds seized]

#46

Post by iskander »

closewith wrote: post #24
iskander wrote: post #18

Whatever your opinions on generative art sold as NFTs, the lack of regulatory clarity seems pretty stifling. 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 cryptocu…

It seems that the criminal complaint is related to money laundering (ie concealing the true source and/or beneficial owner of the funds) rather than tax evasion. If that is the case, then tax compliance is expected (as the point of money laundering is to produce a clean post-tax cash flow). I have no opinion as to the legitimacy of the criminal accusations, but having correctly paid tax liabilities would not be a def…

Right, it seems that they want a KYC list for everyone who bought his art, which isn't possible given the medium. Some announcement of that policy would be better than letting it become known through surprise enforcement.

Re: Art is crime [NFT artist funds seized]

#47

Post by closewith »

iskander wrote: post #46
closewith wrote: post #24

Earlier quoted context omitted.

It seems that the criminal complaint is related to money laundering (ie concealing the true source and/or beneficial owner of the funds) rather than tax evasion. If that is the case, then tax compliance is expected (as the point of money laundering is to produce a clean post-tax cash flow). I have no opinion as to the legitimacy of the criminal accusations, but having correctly paid tax liabilities would not be a def…

Right, it seems that they want a KYC list for everyone who bought his art, which isn't possible given the medium. Some announcement of that policy would be better than letting it become known through surprise enforcement.

> Right, it seems that they want a KYC list for everyone who bought his art, which isn't possible given the medium.

If that's true, then the medium does not appear to be a lawful method for transactions above €10,000 in the EU.

> Some announcement of that policy would be better than letting it become known through surprise enforcement.

AML 5 - the Directive which introduced this regulation - is not exactly a secret. Especially if transacting through a company, it is very difficult to argue ignorance as a defence to non-compliance.

Traditionally, dealers and auction houses would require and assist with KYC/AML compliance, which was part of the value they offered. Relying on non-compliant permissionless contracts does not absolve the vendor of their responsibilities.

Re: Art is crime [NFT artist funds seized]

#48

Post by iskander »

closewith wrote: post #47
iskander wrote: post #46

Earlier quoted context omitted.

Right, it seems that they want a KYC list for everyone who bought his art, which isn't possible given the medium. Some announcement of that policy would be better than letting it become known through surprise enforcement.

> Right, it seems that they want a KYC list for everyone who bought his art, which isn't possible given the medium. If that's true, then the medium does not appear to be a lawful method for transactions above €10,000 in the EU. > Some announcement of that policy would be better than letting it become known through surprise enforcement. AML 5 - the Directive which introduced this regulation - is not exactly a secret.…

I don't think the mint prices for any works by shvembldr have ever exceeded €10k. I looked up the mint price for The Blocks of Art and it was 0.1eth (maybe $300 at the time), the closest I could find was the high point of an auction for Alien Insects was 3eth (~$9k at the time).

In addition to primary sales, there are also royalty payments for secondary sales but I don't think any of his pieces have ever sold for €200k (which would be required for a €10k royalty).

...but maybe this goes against the spirit of AML-D5 since popular generative art still drives many millions of dollars/euros in sales, but often split across smaller transactions (since a collection may contain hundred to thousands of individual pieces).

Re: Art is crime [NFT artist funds seized]

#49

Post by closewith »

muffinthem wrote: post #42
malfist wrote: post #41

Earlier quoted context omitted.

Designing something that breaks the law, does not mean you don't have to enforce the law, or that the law needs to be updated and "made compatible" If I sold a car that was deliberately unsafe, I wouldn't expect people to come to my company's defense and say that being safe in my car isn't possible and therefor the law is outdated and not compatible with current technology.

Laws change as society and technology advances. If your argument is that every permissionless NFT sale is illegal and criminal because it cannot be KYC’d, my argument is that this law is dumb and needs to be rewritten given that many people and companies are now exploring NFTs as legal and taxed income, and most celebrities and companies selling NFTs in the last two years are not going through the same hardships as t…

You have the chain of causation backwards. The law was rewritten, partly because:

> many people and companies are now exploring NFTs as legal and taxed income, and most celebrities and companies selling NFTs in the last two years are not going through the same hardships as the OP.

Which is, of course, a breeding ground for money laundering if exempt from KYC/AML regulation.

Re: Art is crime [NFT artist funds seized]

#50

Post by pjc50 »

iskander wrote: post #48
closewith wrote: post #47

Earlier quoted context omitted.

> Right, it seems that they want a KYC list for everyone who bought his art, which isn't possible given the medium. If that's true, then the medium does not appear to be a lawful method for transactions above €10,000 in the EU. > Some announcement of that policy would be better than letting it become known through surprise enforcement. AML 5 - the Directive which introduced this regulation - is not exactly a secret.…

I don't think the mint prices for any works by shvembldr have ever exceeded €10k. I looked up the mint price for The Blocks of Art and it was 0.1eth (maybe $300 at the time), the closest I could find was the high point of an auction for Alien Insects was 3eth (~$9k at the time). In addition to primary sales, there are also royalty payments for secondary sales but I don't think any of his pieces have ever sold for €20…

It seems like he took it out of coinbase in a lump sum, which resulted in a single large inexplicable transaction.
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