Tech

NFT sellers cheat and win 7 million euros by buying their own works

Chainalysis studied the behavior of 262 NFT sellers suspected of artificially increasing the value of their works. They do this by redeeming their own NFT themselves, thus driving up speculation. The profit generated would be 8.4 million dollars, or approximately 7 million euros.

Credits: Unsplash

Since they have been talked about, NFTs have had their share of detractors. It must be said that their sudden popularity was accompanied bya number of scams, unscrupulous individuals who, for example, do not hesitate to steal other people’s content to resell it for their own profit. Others, according to the Chainalysis Institute, have figured out how to artificially increase the value of their property. It suffices for this to redeem it yourself.

Chainalysis thus studied the behavior of 262 NFT sellers, suspected of using this dishonest practice. Called “wash trading”, this scam is based on a simple principle: in speculating on its own NFTs, the seller drives up its value by making buyers and the platform believe that it is highly coveted. This scheme is visibly bearing fruit since, according to Chainalysis, it generated no less than 8.4 million dollars, or approximately 7 million euros.

True NFT, but false value

Chainalysis notes, however, that this scam does not benefit all sellers. Indeed, of the 262 sellers studied, only 101 made real profits. The others have lost 417,000 dollars (365,000 euros), in particular because of the high taxes on Ethereum, the payment of which is mandatory when an NFT is published on a hosting platform. The institute thus presents the example ofa seller who bought 830 times his collection of NFTs. During the resale (real, this time), it received a little more than 27,000 dollars, or (23,600 euros). Unfortunately for him, he lost $8,383 after paying $36,642 in taxes.

Related: itch.io Says NFTs Are ‘A Scam’, Asks Crypto Fans To ‘Change Their Lives’

Chainalysis further states that these 262 sellers are far from the only ones to use this practice. Their total number is estimated at several thousand.s. The institute also finds the equivalent of $1.4 million in transactions from illicit addresses in the last quarter of 2021. These were likely used for money laundering. To date, the NFT market is worth 22 billion dollars.

Source: Chainalasysis

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