Governments have on the recent days initiated a crackdown in the crypto sector in a bid to nab rogue creators and traders of digital assets. The latest crackdown has been by the tax authority in Israel that has so far arrested 2 players in the NFT creation sector for failure to report $2.2 million in sales made in the 2021 financial year. The 2 tax evasion suspects, Antony Pollack and Avraham Cohen are owners of holyrocknft.com which failed to report its revenue to the Israeli tax authority.
The company allegedly sold NFTs to a tune of 1 700 in exchange for 620 ETH(Ethereum). The total worth of this transaction has been valued at $2.2 million. The failure to report these proceeds as business earnings led the Israeli authority to launch an investigation on charges of tax evasion commited by the pair. Extra charges of money laundering have also been levelled against the 2 due to the nature of the transaction. It is alleged that the funds involved in the trade passed through multiple crypto wallets, a circumstance that makes them suspicious. The magistrate of the prosecuting court has however, released the 2 on probation with an order to surrender the obtained Ethereum tokens including the keys associated with unlocking the wallets holding them.
The pair launched the project in 2021 and offered its users 3-dimensional images of stones in holy sites that were scanned and converted to digital assets. It is pertinent to mention here that holy sites are well protected by the Israeli government because they earn the country revenue from tourists coming to see them from all over the world. In fact, their ownership forms part of the reason why Israel and Palestine are locked at war. Due to the investigation, the company has however, agreed to stop creating and trading the mentioned NFTs until the pending investigation and subsequent legal proceedings have been completed.
The rest of the management team for holyrocknft.com has expressed plans to continue with other activities that were lined up prior to this probe. The probe comes weeks after another famous digital creator, Ben Benhorn, was arrested on similar charges for proceeds gained from the same platform.
Author’s Sentiments
The probes into wealth generated from creation and trading of digital assets by government authorities has sparked a conversation as to whether governments are warming up to revenues within the sector. Investors are at crossroads as to whether the governments’ involvement in their activities is good or bad for their earnings. A quick dive into the sector reveals that there is a scarcity of laws governing the disclosure of these assets and the manner in which they are taxed. This is worsened by the fact that governments do not provide enough information on the taxation of this sector owing to its newness in the market. The rule of thumb in these scenarios is that a government is not entitled to tax from where it has not invested in and created an elaborate infrastructure to support the creation of wealth. This only goes to frustrate the efforts of stakeholders whom upon catching wind of these investigations might dump their assets for fear of having charges filed against them. What are your thoughts on taxation of digital assets and how do you think they affect your adoption of the technology? Are you willing to disclose your proceeds from the sector if the government wholesomely does its part? Leave a comment on your opinions.
