It's no surprise to anyone that the NFT market is a ballooning cash-grab of a sleaze fest, with scams galore and misrepresentation running rampant. The NFT craze has become a natural selling point for big business marketing, yet despite the hype so much of the internals is now seemingly wrapped in fallacy. Not that the tech can't have its uses and be rewarding, it's those around it that have made NFTs a surging commodity with no actual standing.
According to Chainalysis' most recent report, a bevy of NFT traders are boosting the cryptocurrency token's prices via what's called "wash trading,'' a transaction that is utilized to boost the seeming rarity of a particular item. The practice was once witnessed on Wall Street decades ago before it quickly became illegal. Now, said wash trading can be studied in the collectibles scene, such as the WATA market manipulation in graded video game boxes.
The deregulated aspect behind the NFT market allows for more nefarious actions to take place, as the report suggests. Chainalysis highlighted various NFT transactions that occurred back and forth between the same trader at a rate of nearly 25 different times. Said NFT wash traders, a group of which has been numbered at nearly 110 individuals, have purportedly made nearly $8.9 million from these shady deals.
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The authors of the Chainalysis reports explain, "NFT wash trading exists in a murky legal area. While wash trading is prohibited in conventional securities and futures, wash trading involving NFTs has yet to be the subject of an enforcement action."
Several money laundering efforts made via NFTs have likewise cropped up, highlighting the Treasury's most recent move on building stopgaps for NFT and crypto traders. Nearly $1 million in cryptocurrency has purportedly been utilized in NFT marketplace scams with an added $1.4 million being associated in actual sales via nefarious marketplace addresses.
This is nothing new nor suprising, as plenty of the reports from 2021 and beyond suggest the underlying illicit behavior associated with the NFT and the crypto marketplace. Despite these fears, some of the biggest names in sports and entertainment have flooded the market, including The Weeknd, Dale Earnhardt Jr, Troy Baker, and more. This marketing trend has only amplified the demand to a point where the NFT market itself has been estimated to surpass $40 billion.
Given these realities, while the millions may be there for the taking, the NFTs and crypto are ripe with scams and as the data suggests, many of the offerings may well be price gouged to high heaven. So, be careful out there, as you never know when you may purchase a counterfeit NFT or become embroiled in money laundering scheme.
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Written by Ryan Epps
