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NFT wash traders unprofitable, report shows

Monday 7 February 2022 14:51 CET | News

Findings from Chainalysis have shown that the NFT space is prone to wash trading, but fraudsters are not profiting.

Increasing scams and fraudulent activities have infiltrated the NFT space. For instance, NFT marketplace OpenSea recently announced that its free minting tool was prone to misuse. As a result, OpenSea shared that 80% of NFTs created using this tool were either plagiarized, fake or spam. If that wasn’t bad enough, Chainalysis’ also found that the NFT sector is vulnerable to wash trading and money laundering.

Wash trading refers to a transaction in which a seller is on both sides of the trade to paint a misleading picture of an asset’s value and liquidity. Most recently, data generated from the LooksRare NFT marketplace found the platform to be very prone to wash trading.

Yet as wash trading becomes more common across NFT marketplaces, new solutions are being developed to detect fraudulent activity. For example, by using blockchain analysis, Chainalysis is capable of tracking NFT wash trading by analysing sales of NFTs to addresses that were self-financed, meaning they were funded either by the selling address or by the address that initially funded the selling address.

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Keywords: NFT, online fraud, AML, report
Categories: DeFi & Crypto & Web3
Companies: Chainalysis
Countries: World
This article is part of category

DeFi & Crypto & Web3

Chainalysis

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