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3
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· Posted on
February 21, 2024

NFT wash traders made US$8.9 million in 2021

And the laundromat water is starting to get real, real murky.

What's the key learning?

  • New York crypto firm Chainalysis revealed 110 wash traders generated around US$8.9 million from the practice in 2021
  • Wash trading is the process of raising the price of an NFT by acting as both the seller and the buyer in the trade
  • This results in other NFT purchasers making offers at falsely inflated prices.

Background: CommBank has been looking to get into the crypto world, so they've engaged New York crypto firm Chainalysis to advise them. And this crew just shared some wild crypto info.

What happened: First off, at least US$44.2 billion worth of NFT transactions were recorded in 2021, compared to just US$106 million in 2020. 

What else: Now for the juicy bit...110 wash traders generated around US$8.9 million from the practice.

So what's the key learning?

💡 Wash trading is the process of raising the price of an NFT by acting as both the seller and the buyer in the trade. 

💡 Here's how it works:

  • Someone who owns the NFT 'sells' it to themselves at a higher price the actual marketplace value.
  • This makes other buyers think the NFT is more valuable than it really is...
  • This results in other NFT purchasers making offers at falsely inflated prices.

💡Some traders wash trades to inflate the price and make a gain...while others was trades to make 'losses' on paper and offset their capital gains. It's a weird, weird world we live in. 

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