The Israel Tax Authority has arrested two NFT creators on charges of tax evasion and money laundering after allegedly failing to report $2.2 million in sales in 2021.
according to recent reports Avraham Cohen and Anthony Pollack, owners and operators of the NFT project Holyrocknft.com, have been arrested by Israeli news outlet Ynetnews for not reporting millions of US dollars in revenue from the sale of their digital works.
The investigation claimed that the suspects sold 1,700 NFTs from 2021 in exchange for 620 ETH, valued at approximately $2.2 million, for an unreported amount. The tax authorities view these revenues as business income, but the pair don’t report them as such.
Notably, funds were transferred between multiple digital wallets, which amounted to money laundering. The Jerusalem Magistrate’s Court released the two on probation and ordered them to hand over the ETH tokens and keys to the respective wallets.
Launching in 2021, the Holy Rocks NFT is a non-fungible token project that provides 3D scanned imaging of sacred site stones. Allegedly, the founders of the project appeared Last year to defend before the court some miscalculations, including the fact that he had not scanned the images of the stones at the sacred site.
Nevertheless, the project has agreed to stop selling Holy Rocks NFTs until the end of the legal proceedings, according to its website. “However, we will make it clear that all other activities planned for the community will take place as scheduled,” said the team behind the organization.
The move comes after Ben Benhorin, a prominent Tel Aviv-based designer, was arrested by Israeli authorities last week for failing to disclose cryptocurrency earnings in tax reports. Data from OpenSea shows that Benhorin has molded Several NFTs on the platform over the past few years.
NFT hype calms down amid crypto market crash
It is worth noting that the hype on NFTs and metaverse assets has cooled dramatically over the past year amid a broader market downturn that has seen major cryptocurrencies such as bitcoin and ethereum soar to all-time highs compared to loses about 70% of its value.
According to NFT experts from Casino en Ligne, the sale of non-fungible tokens saw A decline of 83 percent year-on-year in 2022. In addition, across all markets, including art, gaming and collectibles, NFT transaction volumes declined by at least 83 percent.
The NFT space reached an all-time high in January 2022, with monthly sales reaching $2.8 billion. However, this number saw a sharp drop earlier this year after bankruptcies and nearly $2 trillion were wiped off the crypto market.
Launched in early February, The Defense Digital Revolution ETF, the first ETF focused on NFTs and Metaverse assets announced That it will close by the end of February. Fund shares fall more than 72% since its inception.