According to a report released this week by blockchain data firm Chainalysis, the NFT market is rife with people buying their own Non-Fungible Tokens, or NFTs, to drive up prices. They call this practice “wash trading”: buying and selling a security in order to cheat the marketsomething that was done in the past on the Wall Street stock market and has been illegal for decades.
The fact that the market for the NFTs, in constant growth, still do not have a regulation, can lead to many types of scams. And in fact, we are witnessing many of them as the plagiarism of original works of art. This “wash trading” has also presented a problem for the cryptocurrency market.
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Buy-sell up to 25 times of the same NFT
The report tracked cases where the same operators sold the same NFTs over and over again at least 25 times and this company has identified a group of 110 suspected NFT launderers They have obtained some 8.9 million dollars in profits with this practice.
The researchers also discovered email addresses associated with scams. An estimated total of $1.4 million in sales in the fourth quarter of 2021 alone came from illicit addresses. The report’s authors recalled that “while money laundering operations are prohibited in conventional securities markets,” Laundering operations related to NFTs have not yet been the subject of an action to tackle the problem.
In the following graph, the yellow color represents, among the illicit money received by NFT platforms, the one who came for scams in recent quarters, according to the Chainalysis report. You can see how scams have been on the rise:
“While physical art money laundering is difficult to quantify, we are able to make more reliable estimates of NFT-based money laundering thanks to the transparency inherent in the blockchain“, have said the authors of this investigation.
A few days ago it became known that 80% of NFTs are fraud, according to information provided by OpenSeathe main platform for these assets.