Wash trading is also a widespread tactic in the NFT space to artificially inflate the "value" of an NFT. Because it's relatively easy to create a pseudonymous cryptocurrency wallet, users will "sell" NFTs to themselves for large amounts to create the appearance of higher demand, and to try to convince other would-be buyers that the NFT is more valuable.
87% of trades on LooksRare NFT platform reported to be wash trades
LooksRare, a new NFT marketplace that launched on January 10, has boasted enormous trading volume since day one. It's no secret that wash trading — that is, a user "selling" an NFT to another wallet they also control — is rife on LooksRare. The platform offers token rewards to any users who buy or sell NFTs, which serves to incentivize wash trades, and has taken no action to disincentivize it — in fact, the platform has retweeted another person who described the incentive system (and the wash trading it generates) as "genius". A new report by NFT analytics company CryptoSlam has put some numbers to the scale of wash trading on the platform: $8.3 billion of the platform's $9.5 billion in trading volume to date (about 87%) appears to be from wash trades.
Melania Trump apparently wash trades her own NFT
Melania Trump launched a new NFT in January, following her December unveiling of the series. The January NFT involved a white hat that Ms. Trump wore during a state visit, as well as a watercolor painting of her wearing it. The press release announcing it also announced that the opening bid would be "the equivalent of $250,000", or around 1,800 SOL. Ultimately the auction drew only a few bids, all around the starting price. A Vice investigation subsequently found that the winning buyer bought the NFT with funds that came from the same address that had created the NFT to begin with. Pesky public transaction records...
A headline-making $69 million NFT sale looks an awful lot like a publicity stunt
Vignesh Sundaresan's $69 million purchase of an NFT by artist Beeple made headlines. However, Amy Castor outlined a few days later that Sundaresan is a business partner of Beeple's, and that Beeple himself owns 2% of the B20 tokens created by Sundaresan's cryptocurrency investment firm. She speculates that money may not have exchanged hands at all, but that Sundaresan and Beeple orchestrated the purchase to artificially inflate the value of the work, increase Beeple's popularity, and draw attention to Sundaresan and his company.
- "Metakovan, the mystery Beeple art buyer, and his NFT/DeFi scheme", Amy Castor
- "JPG File Sells for $69 Million, as 'NFT Mania' Gathers Pace", The New York Times