- The crypto community is divided on the ethical nature of Unsellable’s decision to buy worthless digital collectibles
- Unsellable says the move is meant to reduce NFT collectors’ tax burden
- Unsellable has already purchased over 15,000 dead NFTs
Recently launched NFT platform Unsellable has split the crypto community over its move to buy worthless NFTs in a bid to reduce collectors’ tax burden. While it looks like a noble move in the current winter season in the NFT space, some in the crypto community have questioned its ethical and legal bearing. However, some have embraced the idea with Unsellable currently holding over 15,000 assorted NFTs considered to be dead, worthless or of low value.
Most Worthless NFTs are Knockoffs
Being a worthless NFT dumpsite, Unsellable estimates the value of an NFT based on transaction cost and adds a few coins on top allowing collectors to reduce losses incurred after their holdings lost significant value. One NFT among Unsellable’s 15,000+ worthless digital collectibles was worth $12,000 in January last year but now retails for below $5,000. The NFT, Army of the Dead #78, is among the priciest in Unsellable’s collection.
behold, the $12,000 NFT. #78 from the “The Crypt (Army of the Dead)” collection. the project has had basically no volume since February pic.twitter.com/dzFMr0DEFs
— Molly White (@molly0xFFF) December 30, 2022
Most of the NFTs held by the platform are a knockoff of popular collections such as the Bored Aped Yacht Club (BAYC) and Noun. Despite offering a tax loss harvesting service, the cryptocurrency family is divided on whether using the platform steps on financial regulators’ toes and what Unsellable gains in the process.
Tax Watchdogs Powerless to Act
One certainly unimpressed entity will be tax authorities – one Twitter user noted that the United States tax watchdog IRS “may not be impressed” by people “paying someone to buy” their collectibles at a low price for the sake of filing a loss and consequently reducing their taxable amount.
It’s worth noting that the IRS puts NFTs and Crypto in the same tax group. However, others saw it as a clean deal noting that “it can’t be tax evasion” since there are actual losses incurred and the seller is “reporting it.”
I’m not a tax attorney, but paying someone to buy your investment at a low price so you can claim the loss…seems like a sham transaction. The IRS may not be impressed.
— JohnStark (@JohnStark) December 30, 2022
Weirdly, this is one of those bits that’s not. It can’t be tax evasion, they’re reporting it. And they aren’t laundering because they literally lost money.
Flushing money down a toilet isn’t laundering… it’s just NFT.😉
— ArdentSlacker (@ArdentSlacker) December 31, 2022
Despite ethical and legal questions surrounding the service, the platform is likely to gain popularity due to plummeting crypto prices and the current NFT winter, and an approaching tax season in the United States.
