Latvian NFT artist faces 12 years in prison for “money laundering”, 8.7 million euros in art income frozen
A Latvian developer and artist identified as Ilya Borisov faces up to 12 years in prison after authorities claimed his €8.7 million non-fungible token (NFT) earnings are the proceeds of large-scale money laundering and crime.
Through his website called Art is Crime, Borisov described how the government had frozen his bank accounts without communicating with him about the matter.
In the case timeline, the developer who earned the amount from 3,557 NFT releases noted that the case proceedings were initiated in February this year, but he was only notified of the case on May 9.
“This decision was given on February 10, it says I will get a copy of it. I received it three months later,” Borisov said.
Lack of crypto regulation
Due to the lack of clear rules for crypto tax, the developer stated that he contacted the Latvian State Tax Service (VID) about how to legalize his income in cryptocurrency. Consequently, he ended up paying €2.2 million in income tax in 2021.
He paid the taxes after the agency advised him to register as “self-employed” and pay taxes on the amount withdrawn in euros.
In particular, he made money during the NFT boom of 2021 while describing himself among the successful artists in the niche.
Through his lawyer, Borisov was able to challenge the freezing of his bank account and the court ordered him to access the money on 30 June.
However, the account was never frozen, and it later emerged that the lead investigator in the case had resigned. Interestingly, the new prosecutors who joined the case were also granted emergency orders to seize his property.
As of July 19, he claimed to have shared a full report of his activities and earnings with the police as proof of the legal origin of his money.
The lawsuit
Borisov, a former employee of Meduza, a news website, stressed that none of the prosecutors had made an effort to contact him about the process. The developer has since appealed the decision, but he expects more delays due to the bureaucratic system.
“We submitted a protest to the court against the decision to seize my accounts dated July 3, 2022. The protest was accompanied by all available documents from the case and files with all my transactions and my activities as an artist,” he said.
In the case, Borisov had tried to have the investigator replaced, but the court refused.
Besides the threat of losing his money permanently and serving prison time, Borisov stated that the case has affected him emotionally, a situation complicated by Russia’s invasion of Ukraine. It had also affected his relationship with other family members with his father passing away before a solution was found.
While vowing to keep fighting, Borisov notes that blockchain had opened endless opportunities for artists to make a living, but they still faced challenges from regulators.
