NFT Wash Trading Made Scammers at Least $9m in 2021
Cyber-criminals are making and laundering millions through non-fungible tokens (NFTs), according to new data from Chainalysis.
NFTs are technically unique records on a blockchain that are each linked to a piece of digital content. They can be minted and sold by the content creator to investors, fans and collectors.
Their popularity soared last year, according to Chainalysis.
The Singapore-based blockchain investigations and analytics firm tracked $44.2bn worth of cryptocurrency sent to ERC-721 and ERC-1155 contracts – the two types of Ethereum smart contracts associated with NFT marketplaces and collections. That’s up from just $106m in 2020.
However, this surging market for NFTs also attracted fraudsters and cyber-criminals.
Chainalysis claimed that so-called “wash trading” made scammers $8.9m last year.
Wash trading refers to a situation in which a seller is on both sides of a trade in order to mislead potential buyers about an asset’s value and liquidity.
“In the case of NFT wash trading, the goal would be to make one’s NFT appear more valuable than it really is by ‘selling it’ to a new wallet the original owner also controls,” Chainalysis explained.
“In theory, this would be relatively easy with NFTs, as many NFT