Manipulations in NFT Prices â€“ Artificial Intensifying
Non-fungible tokens have seen a "significant" rise in manipulative practices that exaggerate prices, liquidity, and launder money, according to new data.
In the past three months, non-fungible tokens (NFTs) have seen a surge of interest. Many are now known as the new rage in the art world. But this is not the only place where NFTs are popular. New data showed that digital assets also saw a rise in price manipulation and money laundering.
According to data collected by Chainalysis, NFTs have seen a significant increase in malicious activity over the past few months. The most common of these were wash trading and pump & dump schemes.
The company Chainalysis identified and tracked a number of NFTs (non-fungible tokens) that were sold from-pillar-to-post at least 25 times by the same handful of cryptocurrency wallets — what the company’s analysts say are examples of wash trading, where trades are made between two parties to make it appear a transaction occurs when one doesn’t actually take place.
You might be thinking that what are wash trading and pump-dump schemes!!
Let me clear the concept for you.
Wash trading is a type of trading that happens when a trader simultaneously buys and sells the same financial instruments to create misleading, artificial activity in the marketplace. The wash trader is essentially trading against himself or pretending to trade with himself.
Wash trading artificially inflates the volume of trading and makes it seem as though there is more agreement about the value of an asset than exists. It can also create the illusion that an asset is gaining value.
Wash trading is illegal in some countries, including the United States.
What is the pump and dump scheme? It's a scam that involves artificially inflating the price of a stock, and then "dumping" them on investors at the higher prices after they've been driven up. The victims are left holding stocks that are now worth less than what they paid for, and the perpetrators make off with their money while they're at it. Pump and dumps are illegal, but they still happen.
Blockchain analysis has identified 262 users who have sold an NFT to a self-financed address over 25 times. It has been revealed that most NFT wash traders have not been profitable, but there are those—the successful NFT wash traders—who have profited immensely and have made it so that everyone else combined has profited, too.
Overall profit gained by 262 wash trader groups [source: Chainalysis]
NFTs are making it easier for criminals to launder money. The report found that $1.4 million worth of criminal cryptocurrency was sent to NFT marketplaces in 2021, although the total amount of illicit funds laundered through cryptocurrencies during that time was $8.6 billion.Binance Free $100 (Exclusive) : Use this link to register and receive $100 free and 10% off fees on Binance Futures first month.
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