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Now I want to buy a $10 million NFT of a doodle of a bridge at a garage sale for 50 cents. The questions are: How were the the "dumb money" NFT buyers ever go

Now I want to buy a $10 million NFT of a doodle of a bridge at a garage sale for 50 cents. The questions are: How were the the "dumb money" NFT buyers ever going to liquidate their "investments" on the other side? Did they ever intend to cash-out or just show-off how much money they can burn? Or is it 95% blackmarket money (i.e., drugs, sex slavery, worker slavery) that had nowhere to go except buried in the ground or in the walls of houses?

redisman 5y ago
I don’t understand the money laundering theory. There are a hundred liquid crypto assets to use for that. Big NFTs are high visibility and worthless so it’s the worst of all worlds
- jonfromsf 5y ago
  It's because there's no price, so you can use it to justify money that came from elsewhere. Like if I made a million dollars selling drugs, I can put up an NFT, create a straw buyer (really me) who buys it from me for a million dollars, and now my black money has turned into white money.
  - lfmunoz4 5y ago
    Doesn't make sense to me. Say I have 1 million dollars of BTC that was stolen, what NFT would I buy so that I can later claim my 1 million is legal? In theory, you would say just create an NFT but in practice that wouldn't work or remotely be easy. I would have to create an NFT that is worth say 100 dollars and pretend it went to 1 million. There has to be a justification with previous sells of similar NFTs etc. This is a case where theory and practice doesn't match.
  - polynomial 5y ago
    Where does straw buyer convert the ill-gotten cash to nice clean electronic currency? That's what AML/KYC is intended to prevent.
- adflux 5y ago
  How are you going to prove that it was earned fairly? Easy to do with nfts, anonymous buyer, price highly variable. Just like with normal artwork
  - jonfromsf 5y ago
    Yes in fact artwork has traditionally been used for this sort of thing as well. It's the kind of thing that could sell for a million dollars, without any way for an outsider to determine that this is a fair price. NFTs just supercharge this dynamic.
    - failwhaleshark 5y ago
      Exactly. There isn't enough artwork that has enough value. NFTs create "artwork" out of (almost) nowhere to satisfy the limited market of people with too much money to hide or wash. I've always said the best money-laundering / money-stashing instrument are paintings in a rugged floating tube that can be stashed in a yacht equipped with salt plugs in-case it ever went down.
- th0ma5 5y ago
  I'd agree with this, while it may be possible, if you can already launder the coins just stick with that and forget about the NFT angle which would just be more surface area for a mistake.
  - colinmhayes 5y ago
    You can tumble coins so they can't be associated with the dirty wallet they're from, but that doesn't explain how you ended up with the coins. "someone sent me a million dollars of crypto for no reason" isn't very believable. "someone bought my NFT" is less unreasoable.
    - th0ma5 5y ago
      The tumbling thing has yet to keep anyone out of jail as far as I know, and the origin of the money you better hope was as careful? I dunno. I see what you're saying, but a lot of crime tries to be two sets of books or whatever and they still go to jail.
jl2718 5y ago
The best explanation to my understanding for huge purchases is just self-dealing to pump prices.
- onlyrealcuzzo 5y ago
  Exactly. People have this idea that because NFTs are selling for $10M some moron must think that particular NFT is worth $10M and have spent $10M to buy it - presumably thinking it will be worth even more in the future and s/he can sell for a profit. What an idiot, most people think... However, it could just be that people are buying NFTs from themselves (like CryptoKitties) for massive sums, to attract the interest of get-rich-quick retail investors to spend ~$100 dollars on NFTs - just in case they're suddenly worth $10M a piece in a month. FOMO. It's not like retail investors investing millions of dollars into NFTs. They don't have millions of dollars in the first place!
- dharmab 5y ago
  This doesn't hold up under scrutiny. Look at the Christie's beeple auction- the guy was a normal middle class person going through a reputable dealer.
  - th0ma5 5y ago
    Many people who love this sort of thing say that it was a stunt. Do you have any examples of other normal middle class persons' art at Christie's?
    - carlhancock757 5y ago
      That buyer most definitely wasn't some normal middle class person. He was someone well known in the NFT space who also runs an investment fund related to NFT's. Details here: https://www.ledgerinsights.com/christies-beeple-69-million-nft-art-buyer/ https://www.ledgerinsights.com/christies-beeple-69-million-n... I'm not aware of any crazy NFT auctions that have been purchased by "normal middle class" people. They've all been people heavily involved in crypto. That goes for the losing bidders also. The person who was the second highest bidder in that auction is also heavily involved in the crypto space.

redisman 5y ago

I don’t understand the money laundering theory. There are a hundred liquid crypto assets to use for that. Big NFTs are high visibility and worthless so it’s the worst of all worlds

jonfromsf 5y ago
It's because there's no price, so you can use it to justify money that came from elsewhere. Like if I made a million dollars selling drugs, I can put up an NFT, create a straw buyer (really me) who buys it from me for a million dollars, and now my black money has turned into white money.
- lfmunoz4 5y ago
  Doesn't make sense to me. Say I have 1 million dollars of BTC that was stolen, what NFT would I buy so that I can later claim my 1 million is legal? In theory, you would say just create an NFT but in practice that wouldn't work or remotely be easy. I would have to create an NFT that is worth say 100 dollars and pretend it went to 1 million. There has to be a justification with previous sells of similar NFTs etc. This is a case where theory and practice doesn't match.
- polynomial 5y ago
  Where does straw buyer convert the ill-gotten cash to nice clean electronic currency? That's what AML/KYC is intended to prevent.
adflux 5y ago
How are you going to prove that it was earned fairly? Easy to do with nfts, anonymous buyer, price highly variable. Just like with normal artwork
- jonfromsf 5y ago
  Yes in fact artwork has traditionally been used for this sort of thing as well. It's the kind of thing that could sell for a million dollars, without any way for an outsider to determine that this is a fair price. NFTs just supercharge this dynamic.
  - failwhaleshark 5y ago
    Exactly. There isn't enough artwork that has enough value. NFTs create "artwork" out of (almost) nowhere to satisfy the limited market of people with too much money to hide or wash. I've always said the best money-laundering / money-stashing instrument are paintings in a rugged floating tube that can be stashed in a yacht equipped with salt plugs in-case it ever went down.
th0ma5 5y ago
I'd agree with this, while it may be possible, if you can already launder the coins just stick with that and forget about the NFT angle which would just be more surface area for a mistake.
- colinmhayes 5y ago
  You can tumble coins so they can't be associated with the dirty wallet they're from, but that doesn't explain how you ended up with the coins. "someone sent me a million dollars of crypto for no reason" isn't very believable. "someone bought my NFT" is less unreasoable.
  - th0ma5 5y ago
    The tumbling thing has yet to keep anyone out of jail as far as I know, and the origin of the money you better hope was as careful? I dunno. I see what you're saying, but a lot of crime tries to be two sets of books or whatever and they still go to jail.

jl2718 5y ago

The best explanation to my understanding for huge purchases is just self-dealing to pump prices.

onlyrealcuzzo 5y ago
Exactly. People have this idea that because NFTs are selling for $10M some moron must think that particular NFT is worth $10M and have spent $10M to buy it - presumably thinking it will be worth even more in the future and s/he can sell for a profit. What an idiot, most people think... However, it could just be that people are buying NFTs from themselves (like CryptoKitties) for massive sums, to attract the interest of get-rich-quick retail investors to spend ~$100 dollars on NFTs - just in case they're suddenly worth $10M a piece in a month. FOMO. It's not like retail investors investing millions of dollars into NFTs. They don't have millions of dollars in the first place!
dharmab 5y ago
This doesn't hold up under scrutiny. Look at the Christie's beeple auction- the guy was a normal middle class person going through a reputable dealer.
- th0ma5 5y ago
  Many people who love this sort of thing say that it was a stunt. Do you have any examples of other normal middle class persons' art at Christie's?
  - carlhancock757 5y ago
    That buyer most definitely wasn't some normal middle class person. He was someone well known in the NFT space who also runs an investment fund related to NFT's. Details here: https://www.ledgerinsights.com/christies-beeple-69-million-nft-art-buyer/ https://www.ledgerinsights.com/christies-beeple-69-million-n... I'm not aware of any crazy NFT auctions that have been purchased by "normal middle class" people. They've all been people heavily involved in crypto. That goes for the losing bidders also. The person who was the second highest bidder in that auction is also heavily involved in the crypto space.