Wash trading is regularly cited when it comes to criticizing the NFT space, but what exactly is this process and how is it used to launder money?
Even though crypto wash trading is prohibited in some jurisdictions, the decentralized structure of cryptocurrencies makes it difficult to track down the culprits. Unlike traditional financial instruments such as stocks, which have verified Know Your Customer standards, blockchain-powered assets can be traded anonymously, leading to a risk of wash trading.
Yes, scammers, malware operators, and Chatex conduct money laundering using NFTs. Chatex is a cryptocurrency bank that aims to make cryptocurrency transactions secure, simple and accessible to many customers while maintaining a functional edge over traditional banking. Wash trading scams were tracked by Chainalysis by looking at NFT sales to addresses that were"self-financed," i.e., sales that were funded either by the address that initially funded the selling address or by the selling address, itself. as the most active wash dealer, was found to have made 830 sales to addresses that they had self-financed.
Collectors and traders, likewise, are unable to make an informed judgment. When deceptive facts and history mislead people regarding a piece of art or collectible, it is simple for them to make rash decisions. So, with the NFT markets being impacted by wash trading, is there any way to spot it in the first place?
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