So, if I'm getting this right (correct me if I'm off), launching meme tokens or coins isn't against the law in any Western country, as long as they aren’t utility tokens and aren’t marketed as investments or anything promising returns.
So what's stopping someone from doing this:
> make a meme coin on a low-cost blockchain
> don’t officially promote it, just hand it out for free on anonymous forums (like to your buddies, other accounts you own, or even strangers)
> stir up some buzz using fake accounts or hired shills to make it seem like there's genuine market interest
> buy them back with "dirty" crypto on a decentralized exchange
> report the earnings and pay taxes on it
> live the good life
Considering how some random meme coins can skyrocket in just days and then crash, it seems like you could wash millions and make it look legit.
Am I missing something here? This seems way too simple. If that's the case, should we brace for more crackdowns on decentralized exchanges or a ban on creating your own tokens (which would be wild)? If this loop is real, I can’t imagine it won’t be exploited massively (if it isn’t already), and I doubt regulators will just let it slide.
This is definitely possible, but it is probably easier to
Trade with yourself on some DEXReport the fake profitPay taxes on the reported profit
All of these steps are already present in the original scheme that you provided, so one can execute them and just skip the redundant steps with the meme coins.
That's the essence of what I meant but I added some extra steps to make it look legit.
In case of an investigation, no one would believe you that you managed to sell a completely unknown token/coin (that has no trace of even existing anywhere online) for say $ hundreds of thousands if not $ millions.
But yeah, the principle is the same in both scenarios.
A few hundreds of thousands of $ is not such a big amount, so if one pays the taxes, chances are that the government will just take happily its share and will not ask too many questions. Especially if there is no direct incriminating evidence that the taxpayer has done something illegal.
Depends on the jurisdiction I guess. But having few hundreds extra appearing out of the blue in your account would almost definitely trigger some flags in most of European countries. And in the case of an inquiry from a taxman, a story that you just sold some newly created unknown tokens on DEX smells like a fraud for miles.
But again, this topic is to discuss the potential loophole, not to advise on how to actually launder money.
Legal loop holes are all around you, they are just not very accessible unless you have a specific amount of Money on your Wealth. Money Laundering is unfortunately very easy to do even if Cryptocurrencies never existed, and this is why I will never think Anti Money Laundering and Know Your Customer politics improve the situation in any way. The people who will do ML will find alternatives even if they imposed extremely strict Laws and Regulations.
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I get why they would not believe you but I also do not get it. As you said yourself, there are so many Shit Coins that launch today and die tomorrow. Some people got exceedingly Rich on some of these schemes, and they were not those involved in their creations but just lucky enough to be one of those who sold at the perfect time right before shit hit the fan.
I do not think it takes too much effort to make it look extremely real to the point where they would not even distinguish your fake Transactions from other real Markets. I could offer a few ideas, but I am not here to help any body with Money Laundering after all.
Well, they might be suspicious, but on the other hand the taxpayer has provided all the relevant information that led to his profit, that is a list of the DEX transactions that he made. Even if they ask for the names and/or IDs of the people that he traded with, he couldn't know that, because it is a DEX.
Trading is not illegal, making profit by trading is not illegal either. The guy would gladly provide any additional information, but there is none.
If the EU governments are stupid enough (and they probably are), they will begin blocking the bank accounts of such people, but then again, for bigger amounts (a couple of millions of dollars or more), it makes sense to register a company outside of EU, e.g. in UAE, and legalize the money there.
This is just a pump and dump scheme with a bit of a twist. Market manipulation of this sort is still illegal, even if it happens on a decentralized exchange, in the eyes of the CFTC. If a significantly large amount of illicit funds is being used to purchase a newly launched memecoin, that is going to raise some suspicions.
Most memecoins that launch are scams, and their creators go to great lengths to try and cover their tracks, but blockchain analysis can detect their patterns and follow the flow of funds.
Trading on a DEX isnt enough to give you anonymity. There are enough memecoin scammers out there that it might not seem like a high enough priority for law enforcement, but if they are determined enough to come after you, it is not likely that you can get away with it unless you move to Iran or North Korea.
Lol, you ask why people aren't creating their meme tokens, pamping them and making money?
If you read the latest news and statistics, you will realise that up to half of the trading volume in most major ecosystems is meme tokens.
https://solanafloor.com/news/solanas-meme-coin-market-cap-surges-to-12-b-setting-a-new-all-time-high
Solana's Meme Coin Market Cap Surges to $12B, Setting a New All-Time High
Solana's meme coin market hits $12 billion, showcasing resilience despite multiple retracements and predictions of market saturation.
Hundreds of meme tokens appear every day, and this market is already so highly competitive that the risks of making a loss are much higher than making a profit.
I'm pretty sure that's already part of the reason why so many meme coins have been popping up in the first place.
Also:
This scheme relies on you not being caught having manipulated the market and doing wash trades, so it's not a loop-hole but just money laundering with a bit of a pump-and-dump scheme (whereas I guess most meme coins are pump-and-dump schemes with a bit of money laundering).
However, you know your way around business.
Just don't get into trouble if, after giving away some of your tokens and then suddenly gaining value, someone sells the token before you.
And at this point it turns out that the token you bought is worth nothing. And also, absolutely no one needs it.
In my opinion, you have come up with a great way to discreetly get rid of your "dirty" cryptocurrencies, so that the guardians of law and order will not have any questions for you.
The main thing is that after these meme coins disappear, your money doesn't disappear.
There will definitely be bans. Otherwise, some "smart" bloggers are already creating trash-coins, which they "palm off" to their subscribers and profit from them.
Regulation is inevitable and they will definitely not tolerate it. They just need time to prepare, because the bureaucratic mechanisms are slow to start.
Next step is creating a charity organization, send the shitcoins you created to address that associated with charity organization, so you don't have to pay income tax. Many rich people use this to get sympathy, built personal branding, and earn more money (by reducing the tax).
But, the first thing I want to ask is how to get the "dirty money"? they will not just trust random strangers blindly, they also not want to reveal it because they might be in trouble.
Yes, but for this scheme to work, you need the coin to explode in value, correct? How will it skyrocket if it's just an ordinary memecoin? You can have all the "dirty crypto" in your wallets, but you certainly need influence from external factors. (Unless of course you have millions of dollars worth of crypto, and it can justify this 'crazy pumping'.)
In general, yes. You can launder money. It was possible, it is possible, and likely always be. Probably easier now than in the past.
Looks like youre overcomplicating things. The anti-money laundering law is actually pretty simple. It applies to any kind of money, whether it's coins, tokens, or even fiat currency, as long as theres an act of trying to hide or clean up dirty money, its considered illegal. Its not really about the method used; its about the intention behind it.
As stated, loopholes have always existed and will always exist, you don't need crypto no NFTs for that. However, this is not the first time I have heard about something like what the OP exposes. As in the crypto world you can make transactions without being identified, reporting that you have bought something cheap and then sold expensive, either a meme coin or a NFT is technically possible and in principle it is the treasury of your country that should prove that you have done something wrong, what I do have clear is that you are going to set off alarms, especially if the amount is very large.
A law really becomes a law when it starts to work. I don't remember any significant events when someone was fined for selling mem tokens or NFT tokens. I remember that some bloggers were fined for it, but they were small fines. Meme tokens do not promise to make money, so it is a very difficult industry to regulate, and the projects usually do not have such large sums of money that big regulators are interested in them.
No you are not missing anything here. That's exactly how easy it is to launder money nowadays. Not just meme coins, you can also consider NFT. Why do you think people went crazy in buying some repist looking money photo for millions of dollars! It's the new age money laundering and NFTs were used for it. Now it's time for meme coins.
You aren't missing anything! That's how things are done and I don't think any countries are doing anything to ban such activities.
Legally we never get and have no opportunity to launder money against meme coins, unless we ourselves created the meme coin and we are the CEO of the meme.
Generally and on average what we find and see in the market, the meme coin has already had a pump, we are at the end of the story, basically we never get the bubble, because when memes are released on the market they don't tell us, we know that after this phenomenon occurs and in the end we are always in a state of defeat and fail to launder money, my understanding is that there is no legal loophole to do that, because we are all just victims of memes.
For that reason, if we look for legitimate legal loopholes in laundering meme coins, create your own memes, maybe there is a chance for that, if you don't create memes and hope for what you get in the market, you will most likely fail.
I would separate money laundering and memtokens. The situation described in the first post may have happened or will happen, but it is a very complicated scheme.You can do it easier by buying any cheap NFT token or a series of them on the market and then sell it to yourself from an unauthorised wallet and declare the profit. But there are even easier schemes, when they legalise cryptocurrency profits through offshore zones with very minimal taxes.