In February, NFT wash trading climbs 126%

The top six nonfungible token (NFT) markets witnessed an increase in NFT wash trade volume of $580 million for the fourth consecutive month.

According to recent research, February 2023 saw a 126% rise in volume compared to the previous month’s $250 million. As an explanation for the increase, the research cites a link with the general recovery of NFT marketplace trading volume in February, which reached $1.89 billion.

The investigation covered six marketplaces: Magic Eden, OpenSea, Blur, X2Y2, CryptoPunks, and LooksRare. X2Y2, Blur, and LooksRare contributed the most to the amount of NFT wash trading in February with $280 million (49.7%), $150 million (27.4%), and $80 million (15.4%), respectively.

Historically, these markets have rewarded users for expanding their trade volume via transaction incentives.

The remaining two markets, Magic Eden and OpenSea, are believed to have $590,000 and $42,57,000,000 in NFT wash trading, respectively. According to the article, CryptoPunks, on the other hand, did not see any NFT wash trading.

The analysis indicated that nonfungible token washing comprised 23.4% of “unadjusted trading volume” across the six main marketplaces in the sector. Wash trading of non-exchange-traded securities is the manipulation of trade volume or price by repeated transactions.

Although wash trading is unlawful in conventional financial markets, a lack of clear restrictions makes it a problem in both the larger crypto ecosystem and with NFTs.

In January, crypto investor Mark Cuban predicted that wash trading would lead to the market’s next “implosion.” Novel artificial intelligence-based technology has emerged to resolve problems in the NFT market, such as wash trading.

On March 16, a fraud using bogus Blur token airdrop websites was discovered, from which $300k was successfully taken.