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Wash Trading NFTs & Crypto Fraud (article)

markgoode77markgoode77 Posts: 326
in Non-Fungible Token (NFT) Art

This fella's convinced Crypto & NFTs are here to stay, but I found it a fascinating article on the 'dodgy' side of this business.  It's behind a paywall, but I believe limited access is allowed.  Worth a read whatever your views on the subject.

https://www.telegraph.co.uk/business/2022/02/14/beware-crypto-fraudsters-stay/

Comments

  • Pickle RendererPickle Renderer Posts: 21

    Came here to post that.  "87% of the volume of trades taking place on the second largest NFT marketplace, LooksRare, were wash trades". 

  • PaintboxPaintbox Posts: 1,533
    edited February 14

    Who knew if you make an unregulated system, the system would become rife with unregulated behaviour? Quelle surprise!

    Post edited by Paintbox on
  • TorquinoxTorquinox Posts: 1,664

    I had no trouble viewing the article. I also found more:

    https://www.zdnet.com/article/more-than-8-million-made-from-nft-wash-trading-chainalysis/

    https://fortune.com/2022/02/04/nft-wash-trade-scam-millions/

    Interesting takeaway for this one: A lot of wash traders lose money after gas fees are added in.

    Thanks to feedback loop in Internet reporting, several other articles all say the same thing: 110 traders made almost $9 million, 154 more lost combined $400k to gas fees.

    To me, compared to $billions of the NFT market, these sums seem sort of paltry. Depends how widespread the practice is and what the total numbers may actually be. We have no easy way of determining that.

     

  • Ghosty12Ghosty12 Posts: 1,780

    Here is an article about something that has recently happened.. https://www.reuters.com/world/uk/uk-makes-first-seizure-nfts-tax-crackdown-2022-02-14/

  • TorquinoxTorquinox Posts: 1,664

    I saw that, too! It will be worth watching to see how this shakes out.

  • MelissaGTMelissaGT Posts: 2,188

    The article is behind a paywall for me. What is a wash trade?

    And not surprised at all that there is so much fraud. It's happened to me once (that I know of) with my artwork getting stolen and put up on OpenSea (they took it down after submitting a DMCA notification). I would have never known if it wasn't for DeviantArt. 

  • markgoode77markgoode77 Posts: 326

    MelissaGT said:

    The article is behind a paywall for me. What is a wash trade?

    "At least two new tricks of the crypto world turn out to be very old tricks, popular in the 1920s. Back then, many schemes promoted land and stocks that didn’t actually exist. And a technique was devised which allowed a scheme’s promoters to self-deal, to inflate their apparent value. This practice became known as “wash trading”. Both of these ruses are rampant today in the market for NFTs, or “Non-Fungible Tokens”.

    An NFT is supposed to be a new kind of intangible asset, an immutable entry on a digital ledger. But the asset may be no more than the equivalent of a cell in somebody’s Excel spreadsheet - a cell that can be wiped with the click of a mouse button.

    Wash-trading is back, too. Here, an NFT appears to have been sold for $1m, but it hasn’t really been bought at all - the “buyer” has transferred $1m of crypto currency from one wallet to another. Something of no value, such as a digital image of a cartoon ape, suddenly appears to have great value, and can then be sold onto the next speculator in line, such as a Premier League footballer. 

    According to one analysis, 87pc of the volume of trades taking place on the second largest NFT marketplace, LooksRare, were wash trades. So who’s going to explain wash-trading to footballers?"

     

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