The NFT market is teeming with investors buying tokens from themselves, according to a report released by analytics firm Chainalysis. This practice allowed them to earn nearly $9 million.
Fictitious trading in securities was once common on Wall Street, but has been outlawed for almost a century. The huge unregulated NFT market proved to be a great opportunity for scammers. Their goal is to make the tokens seem more valuable and in demand than they really are; To do this, the investor "sells" the NFT to a new wallet, which he controls. This is quite simplement, analysts say, since many NFT trading platforms allow users to enter into transactions without identifying themselves, but simply by connecting their wallet to the site.
After analyzing the transaction data, Chainalysis found that some sellers made hundreds of fictitious purchases. For example, one of the traders - analysts called him "seller 1" - made 830 sales to addresses that he financed. So, for 0.4 Ethereum, he sold an NFT from an address starting with 0x828 to an address starting with 0x084, while shortly before the transaction, address 0x828 sent 0.45 Ethereum to address 0x084.
Similar "deals" were made with hundreds of other addresses. In the figure, “seller 1” is the address in the middle, from which all other addresses received funds shortly before buying NFT from him. As Chainalysis notes, “seller 1” does not appear to have made a profit: if you calculate the amount he earned from real NFT sales, it does not compensate for the amount spent on the purchase of tokens initially.
The situation changes if more fictitious transactions are analyzed. Analysts identified 262 users who sold NFTs to self-funded addresses—that is, most likely to themselves—and found that while most of the dummy traders suffered losses, the successful ones made so much that overall, this group of 262 people made huge profits.
The 110 fictitious traders collectively received almost $8.9 million. Worst of all, analysts point out, that $8.9 million comes from sales to unsuspecting buyers who hope the value of purchased NFTs rises as they move from one collector to another.
Among the more global consequences of fictitious NFT trading, analysts cite the creation of an unfair market and the destruction of trust in the ecosystem. Chainalysis is calling on marketplaces to discourage this activity.
“Blockchain analysis makes it easy to identify users who sell NFTs to addresses they fund themselves, so marketplaces may consider banning or other penalties for the worst offenders,” the analysts conclude.
bbabo.Net