Western Wall NFT creators suspected of large-scale tax evasion

Israel's Tax Authority in Jerusalem is investigating the possibility that two NFT (non-fungible token) creators did not report revenues of approximately NIS 8 million from the sale of an NFT based on a 3D scan of the stones of the Western Wall, according to a Friday report from the Tax Authority.

The suspects are Avraham Cohen from Jerusalem and Antony Polak from Har Adar. They are the owners of the website holyrocknft.com, which -according to its own literature- works to "combine the business world and technological progress with Jewish faith and spirit." Through this site, according to the Tax Authority, the two sold their NFTs.

The investigation revealed that the suspects have sold 1,700 works since 2021 and obtained 620 Ethereum in payment which, at the time of the transactions, was equivalent to approximately NIS 8m. According to these findings, these revenues are, in fact, business earnings - but the pair did not report them as such.

Some of the funds received by the suspects were even transferred between digital wallets, which raises additional suspicion of criminal concealment of property.

The judge presiding over the case, Judge Amir Shaked of the Jerusalem Magistrate's Court, released the suspects under restrictive conditions, reported the Tax Authority. These conditions included the suspects' turning over their digital wallets where the Ethereum is stored.

The Tax Authority reported that the investigation is ongoing.

As of press time, the Holy Rock NFT Project's website reads: "In accordance with the settlement we reached with the State of Israel (Ministry of Religions), as part of the proceedings 67258-11-21, we would like to update that we have decided to agree to leave the temporary restraining order, which prevents us from selling additional Holy Rocks NFT, valid until the end of legal proceedings with the state Israel, however, we will make it clear that all other activities planned for the community will take place as scheduled."

Recent Western Wall NFT criminal activity

Ben Benhorin, a graphic designer from Tel Aviv who specialized in creating and selling NFT-type digital art, was arrested on Feb. 26 for not reporting his revenues totaling approximately NIS 3 million from his sales as well as not reporting the conversion of 30 Ethereum-type digital currencies that he received as payments.

Benhorin creates and sells NFT art on the Opensea International platform under the brand name WUWA. It was found during the investigation that as part of the annual report to the tax authorities in 2021, the suspect did not report any income from sales on the platform at all.

According to the suspicion, Benhorin converted some of the cryptocurrency he received for the sale of the NFT into other currencies, using the Uniswap platform and didn't report this to the tax authority, an action that is considered a sale and taxable.

No reports of such conversions were found in the tax returns submitted by the suspect.

Walla! contributed to this report.