Chainalysis, a major blockchain and cryptocurrency auditing firm, has released a report which indicates the signs of significant “wash trading” activity by NFTs. In these activities, certain players essentially sell their assets to themselves in order to raise the floor price of the NFTs so that they may be sold at a greater price later. However, due to high gas prices, this washing activity has not always been profitable.
- These activities aim to increase the value of an NFT by giving the appearance of past sales.
- Using blockchain analysis, the company has identified 262 individuals who have sold NFTs to self-funded addresses more than 25 times.
- According to the report, the address has lost approximately $8000.According to the company, the legal status of wash trading in NFT marketplaces is unclear.
- The company also identified a few cases of money laundering using NFTs, usually from scam-related addresses.
- According to Chainalysis, this action represents a “drop in the bucket” when compared to the amount of bitcoin laundered in 2021.
With the growth of NFTs in 2021 and some corporations beginning to integrate NFTs into their business models, instances of wash trading may begin to attract the attention of authorities worldwide. The most active address in these activities has executed this method over 800 times, but the consequences have not been favourable for its owner or owners. Due to gas fees, the cost of transactions to allow these movements was much more than the value derived from sales. According to the report, the address has lost approximately $8000.
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