Money Laundering Might Taint NFTs Too, Prepare For Tighter Controls
Simon Chandler, 27 March 2021
While non-fungible tokens (NFTs) are certainly the big thing in crypto at the moment, they aren’t without their problems. Aside from accusations of hype and faddishness, NFTs also raise the familiar and thorny issue of money laundering.
Without much in the way of quantitative proof, detractors have linked the burgeoning NFT market with money laundering, with some people describing them as the “best money laundering method in the cryptocurrency world.”
However, industry players speaking with Cryptonews.com suggested that, while NFTs are open to money launderers, there’s currently nothing concrete to indicate that their use for laundering is significantly worse than it is in the traditional art world, or with other types of crypto. At the same time, they attest that the strict introduction of KYC/AML (know your customer / anti-money laundering) standards will help combat this emerging problem. Continue reading “Article: Money Laundering Might Taint NFTs Too, Prepare For Tighter Controls”
Securities Lending Times, 20 August 2013
“Abusive”, “like a form of terrorism” and “funny paper”are three descriptions of naked short selling, given by the Securities and Exchange Committee, a life insurance company CEO, and broker-dealer Jeffrey Wolfson, respectively.
They do not do much to dispel the belief of naked shorting as a practice that is even worse than selling a borrowed security, only to buy it back at a lower price—what we know as covered short selling.
Read full article.
Naked Short Selling: Is it Information-Based Trading?
Harrison Liu, Sean T. McGuire, Edward P. Swanson
SSRN Electronic Journal, 21 June 2013
Citing a widely held belief that naked short selling is not based on company fundamentals, the SEC (2008) has substantially tightened Reg. SHO close-out regulations in an effort to eliminate naked short selling. Contrary to accepted belief, we find that accounting fundamentals are highly significant in explaining naked short sales. Further, naked short sales contain incremental information about future stock prices: Abnormal returns from a long/short trading strategy that buys (sells short) shares with low (high) short interest are more than seven times larger using naked and covered short interest, compared to returns using only covered short interest (15.2 percent vs. 2.1 percent annualized). Our findings show that recent actions by regulators to eliminate naked short sales are likely to impede informed arbitrage and reduce market efficiency.
PDF ( 41 pages): Naked Short Selling: Is it Information-Based Trading?