From money laundering to mixing services, Arda Akartuna breaks down the most important findings from Elliptic’s new report on non-fungible tokens (NFTs) and financial crime.
One of Elliptic’s surprising findings “NFT and financial crime” report is a relatively low level of money laundering activity. We found that just over $8 million in illicit funds were laundered through NFT platforms between Q4 2017 and Q2 2022.
Almost all of the $8.1 million in illicit funds flowing into NFT services that Elliptic identified originated from theft, fraud, identity theft, or ponzi schemes (note that the recently sanctioned entity Tornado Cash was still considered a “mixer” when this research made).
Moreover, theft, fraud and phishing related transactions are likely to involve the theft of NFTs in the first place – increasing the chances of subsequent NFT market transactions to cash out and launder these stolen assets.
So why might NFTs be attractive to money launderers?
Although the findings show that illicit financial flows to NFT platforms represent a small proportion of total NFT-related trading activity, NFT-based money laundering is there are also lures for bad actors.
This is mainly due to the prices of NFTs which can be easily manipulated. Finally, since most of the assets consist of cartoon, computer-generated JPEGs, one could argue that they are effectively worthless. However, with a strong community and high demand, NFTs in certain collections can sell for millions.
Although rarity, online popularity, and use cases influence price, the effect of these determinants can still be unclear for lesser-known NFTs. An NFT could therefore be sold for $1 or $100,000 without any doubt, making it difficult to assess the objective price of the NFT under investigation.
Blockchain analytics in preventing NFT crime
As with any blockchain-based implementation, the improved transparency of NFTs on the blockchain can act as a deterrent to money laundering. For almost any NFT, its marketplace or blockchain page can provide the researcher with a complete history of sales, transfers, listings, offers and all other actions during its existence.
Links to related transactions and buyer/seller wallets can provide further insight into other trading party activity. This transparency – which makes it easier for investigators to trace NFTs – is undesirable for launderers, for whom anonymity is key.
The Mixer’s Role in NFT Money Laundering
Therefore, another interesting finding – especially in light of the recent sanctions against Tornado Cash – is the importance of crypto mixers in money laundering related to NFT platforms.
In reality, launderers rarely transfer funds to a centralized or semi-centralized platform or marketplace without first disguising their illicit proceeds. Obfuscation services range from mixers – like the now-sanctioned entity Tornado Cash – to KYC-free coin exchanges, crypto-asset ATMs or gambling services. For criminals, these services allow them to disassociate themselves from their original illegal, profit-generating activities and break their transaction trail.
The exposure of these services to NFT platforms and markets is relatively higher than the exposure to direct illicit activities. However, the use of such services before trading NFTs remains generally low. Funds originating from mixers – predominantly Tornado Cash – contributed $137.6 million to these platforms, which accounted for 0.34% of all identified transactions (excluding unknowns).
When it comes to laundering proceeds from stolen NFTs, Elliptic’s research also shows that most fraudsters prefer to use mixers to hide their income. Based on $67.1 million in Ether (ETH) originating from 323 fraudster wallets, 52.4% ($35.2 million) was laundered through Tornado Cash.

As with many crimes, the perceived odds of NFT-based crime occurring are higher than they actually are. In the cases of theft, fraud, carpet pulling and money laundering discussed in the report, this is very evident – causing a noticeable level of paranoia, caution and fear in NFT communities. Elliptic’s data-driven analysis found that genuine cases of these crimes make up a small proportion of NFT-related trade.
So while elliptical research shows that NFT to have bought with illicit assets and NFT platforms are exposed to money laundering activities, this number should be put into context against the more than $40 billion in NFT-related trading activity.
Although crime represents a small proportion of overall NFT trading, it has a disproportionate impact on the reputation of the industry and undermines the quality of experience for legitimate users. NFT markets must be proactive in risk management to mitigate these risks and recurring issues. Sanction screening solutions are also becoming increasingly important for NFT-based platforms.
In our report, we dive deeper into money laundering, market manipulation, fraud and sanctions risks with NFTs: “NFT and financial crime”.
Compliance NFTs Crypto Crime