The Latvian government has frozen NFT artist Ilya Borisov’s earnings of around €8.7 million over allegations of money laundering. He faces up to 12 years in jail if found guilty.
According to Borisov, the authorities had filed a case against him in February of 2022 but he was only notified about it in May — three months later.
Borisov said that €8.7 million were earned from the sale of 3,557 NFT releases during the bloom of the NFT market in 2021.
Earnings or laundering?
Due to the lack of clear regulations concerning crypto taxations in Latvia, he wrote to the Latvian State Revenue Service (VID) on ways he could pay his due taxes.
He revealed that the agency advised him to register as a “self-employed person” in the country and pay taxes on the amount withdrawn in euros. Based on these instructions, he paid up to €2.2 million as tax in 2021 alone.
After he was notified that his accounts had been locked, he proceeded to challenge the action in court where he got a judgment in his favor that the freeze should be reversed.
But despite this, authorities have refused him access to his accounts.
“We filed a protest with 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.”
Borisov has described the Latvian government’s action as a significant challenge facing the crypto space adding that “it’s a crime to be an artist in Latvia.”
Crypto and NFT taxation
Most major governments worldwide are yet to release a framework on how crypto earnings should be taxed, causing issues for crypto traders and NFT artists.
In India, crypto traders face a 30% taxation and a 1% tax that is deducted from the source for every crypto transaction. This has caused a massive decline in the trading volume of exchanges in the country.
South Korean authorities recently deferred the implementation of their 20% crypto tax law till 2025 when a better investor protection system would hopefully be in place. Meanwhile, Thailand was forced to retract its decision to enforce a 15% crypto tax after the community’s overwhelmingly negative reaction to the law.