As scammers find a new way to understand, what is ‘wash trading’ in NFTs
November 2, 2022
At least $44.2 billion in cryptocurrencies was transmitted to Ethereum smart contracts related to the NFT marketplace, Chainalysis noted
Getting duped online, is not a new trend, however it seems that scammers who are relentless in their approach, have found a new way. As per a recent report by Chainalysis, wash trading is a transaction where-in the seller is present on both sides of the trade in order to creating misleading value of an asset. “Several non-fungible tokens (NFTs) trading platforms allow users to trade without identifying themselves by just connecting their wallets to the site. This means that several wallets can be created and linked to a platform by a single user,” Saurav Raaj, founder, Wize, tokenisation service provider told FE Blockchain.
According to Chainalysis, at least $44.2 billion in cryptocurrencies was transmitted to Ethereum smart contracts related to NFT marketplaces and collections last year. According to the research, this figure will be $106 million in 2020. “Wash trading is banned in most traditional markets in the United States, but it is difficult to police in the crypto realm due to the anonymity of blockchain interactions,” Aniket Jindal, co-founder, chief operating officer, (COO), Biconomy, said.
Industry analysts believe that successful wash traders are individuals who perform many NFT trades across different platforms. It is understood that washing trade is not good because of the high prices of gas expenses and the fact that all transactions are visible across the Ethereum blockchain network.
As per industry experts, there are indicators that an NFT has been wash traded, such as a significant gap between the floor and list price of an NFT in a collection. “Scammers on Discord, Telegram, or any other social media posing to be official project members offer users early access, discounts,” Shubham Gupta, co-founder, and chief product officer, STAN, noted.
[The Financial Express]
