The assets of artists who got rich by NFTs have been frozen, and they are now calling for international help

The internationally acclaimed generative artist Shvembldr is seeking international help after his assets of 7 million euros were illegally frozen.

Yesterday Shvembldr opened up on Twitter about his six-month struggle with the Latvian police, and he still has more than seven million euros frozen in the bank. These incomes all come from his art NFT sales. He detailed every NFT income information and the violations of the Latvian Police Department on the website "Art is Crime" . Based on the open and transparent characteristics of blockchain transaction records, Shvembldr is using a unique way of web3 to file a complaint to the world, but it seems that the artist and the Latvian police are two parallel lines that cannot talk to each other.

I think the whole incident will be of great significance in the history of global cryptocurrency, so I wrote an article about the cause and effect, hoping that more people will pay attention. Can cryptocurrency holders file tax returns legally? This is an inevitable question faced by every government facing digital transformation. Shvembldr's bloody case is a lesson in the past.

Shvembldr is no ordinary person. Shvembldr, a Latvian artist whose real name is Ilja Borisovs, is a generative artist who generates high transaction volume in the NFT art market. Shvembldr, known for being prolific and daring to experiment with new forms of NFTs, will earn 4,253 ether (ETH) in 2021 alone, which is more than NT$193 million at the current exchange rate. He has remitted about 8.7 million euros in his artwork income to SEB Latvijas Unibanka, the largest bank in Latvia, through the cryptocurrency exchange Coinbase, but it has been frozen since February this year.

Shvembldr published his first work on Tezos in March 2021, and sold more than 5,000 works in the following year, covering Ethereum and Tezos, mostly generative art. Shvembldr's main battlefield includes the well-known generative art platform Artblocks, the invitation-based platform Foundation, etc. He even established his own collectors club TOBA Club, which is a very successful generative artist in the trading market in 2021. I also have two of his works in my hands, he is really a generative art avid creator, the quality and quantity are amazing. (You can see a very detailed publication timeline and information on each transaction on his website)

Shvembldr detailed the process of interacting with the bank on the "Art is Crime" website, discussing the method of legal withdrawal (the process of converting cryptocurrency into legal currency), and clearly declares and pays taxes. So far, he has to pay up to 2.2 million euros tax to the state. In October 2021, he was taken to the State Security Service in Latvia for tea, with officials stressing that this was not an interrogation, but an understanding of how an artist could earn so much money. In the end the official said he liked his story and wished Shvembldr all the best.

Shvembldr's bank account was frozen without warning in February 2022, and police refused to provide any information. At the time, the police believed that the artist received a large amount of funds from Coinbase, which could not be traced back to its source, thus implying the possibility of financial crime. The police did not send any written notice, so the artist lost the opportunity to appeal within the time limit. Since February, police have not tried to understand how the artist could make such a fortune.

After the efforts of artists and lawyers, the matter was ruled illegal by the court in June 2022, and the relevant personnel lost their jobs. Shvembldr seems to have gained the snow, but the plot has turned sharply. The bank was still reluctant to unfreeze Shvembldr after the court's decision. After a weekend, the head of the police department's organized crime section, Pēteris Bauska, issued a new arrest order (Arrest Order). Of course, the artist's bank account continued to be frozen. In the public confession of tens of thousands of words, we can see that the artist who has been fighting for half a year has changed from being a proud citizen of patriotism and paying taxes to a skeptic who does not trust public power.

Ironically, even if Shvembldr's assets are frozen, he will continue to pay hefty taxes to the state. This is a ridiculous drama for cryptocurrency holders willing to legally and compliantly report their sources of income. The case will set a precedent for European and world law, and any artist who sells NFTs could be next.

The above events give us two unconfirmed views. One is that it is difficult for the cryptocurrency world (the so-called web3 world) to communicate with the public power in the real world. Freelance workers), emerging industries and regulators are almost difficult to know each other, and so far, cryptocurrencies are still considered "currency" rather than "currency" in mainstream countries; second, the public sector itself is complicated, and the same incident occurs in different regulators. There will be different positions, and the Shvembldr incident will have a fractured cross-departmental communication.

As far as my personal biased point of view is concerned, when a large amount of cash flow is controlled by atypical credit institutions or individuals, traditional powers often strangle emerging industries on the premise of maintaining their legal principles. Even if the cash flow of Shvembldr is still insignificant in the face of business giants, money laundering industry, top art auction market, and national budget, it is undoubtedly a big blow to the web3 community due to the height of Crypto Art.

When encryption art has given wealth to individual producers, but policies have not kept up, and pioneers in emerging fields have become prisoners, this is by no means what a society that rewards innovation is welcome. Looking back, the field of generative art in Taiwan is growing and thriving, and now it also occupies a place in the world market. How to avoid following the footsteps of Latvia, please pay more attention to relevant departments.

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postscript:

In addition to detailing his dealings with the police, Shvembldr's article also describes how he jumped into the field of generative art. The story is very moving and worth reading as a lesson plan. If you don't have time, you can directly watch the FAQ chapter, and answer from the artist's point of view why he can make a fortune, why the public has such a strong negative perception of NFT, and why he can't publish works now?

Among them, the following explanations of the concept of "digital assets" are suitable for young and old, and are excerpted below: "

It is difficult for us to explain the value of digital images to non-professionals and people over 30 years old, you can of course "right-click to download", but for those who grew up in online games and understood the value of digital assets from a young age, understand this moment What is going on is not difficult.

I usually give a few examples:

Imagine the old days when you wanted to please a child and you would buy him a toy for 50 euros. The toy was made by a child laborer in China who worked for food and clothing. It was then packed in a shipping container, leaving a carbon footprint halfway around the globe. You give a toy to your little one, and they only play with it for an hour and then throw it in the trash with other toys, and it ends up rotting in the ground for 3,000 years.

Now imagine that you bought a dragon on Roblox (a multiplayer online game that kids love) for 50 euros. No oppressed Chinese child labor, no carbon footprint (NFTs on Ethereum are controversial), no garbage collection, etc. Your little one is happy for at least six months. The child rides the dragon, feeds it, dresses it, and puts it on the bed in play.

This is the difference between the physical world and the digital world. Now replace that child with an adult (actually there is no such creature as an adult).

The reason the kid is happy is that cool dragon who stands out from his peers and gains some status. From the above case, do you know why I want to send NFT? Social status drives the majority, even in small communities. How do you feel about someone who owns 20 Lamborghini worth heads? This is the only avatar. Let's add access to specific communities, common interests, meeting new people, networking opportunities, opportunities to trade (but not always make money) in this market, etc. In the PFP (avatar) market, the above concepts are all called utility.

As for art, its empowerment lies in its beauty and the feelings it evokes. That's why the traditional art market is so small: not everyone is interested in it. Artists hope that because of NFTs, the art market will expand, but the barriers to entry of NFTs prevent ordinary people from entering the market. Novice collectors must also know: different cryptocurrencies, terminology, how to store them, notation words, hot wallets, cold wallets, apps, exchanges, security certifications, marketplaces, gas wars, chat rooms, social networks, etc. That's why new users most often come to the market driven by quick income, a TikTok video being a good example of a man in an LV suit who said he ate bad food under a bridge two months ago.

But as in the real world, collecting an expensive piece of art from a brilliant artist has the same motivation for collectors. Collectors build virtual galleries or order prints for their NFTs. They use them on cover photos and avatars. Form a community and interact directly with artists. I've seen people who come here to make money get into the NFT art chat context and become avid collectors just because it's so exciting.

The conclusion is that you have to get deep into it to understand what's going on in the NFT world. You don't know the good things that happen there because they don't deserve the headlines. "

Website link: "Art is Crime"

In solidarity with Shvembdlr: Twitter